Nice to see The New York Times come on board with editorial concerns today similar to those stated in our Outrage of the Week posting last Friday. You don’t often see an editorial dealing with technical business laws, like Section 404 of the Sarbanes-Oxley Act, but as the Times points out, and as we argued on Friday,
The Bush administration — with the vocal support of business interests — is arguing that the time is right to loosen some of the requirements of the Sarbanes-Oxley corporate reform law, passed after the scandals at Enron and WorldCom.
It also cites, as we did, a disturbing example of why the new laws are important to investors:
Last week, General Motors restated five years of financial results. In its annual report, the company warned that the lack of effective internal controls “could adversely affect our financial condition and ability to carry out our strategic business plan.”
The Times concludes:
While the new rules may be a hassle, it is clear that auditing internal controls is helping companies clean up their acts and it would be a serious mistake to weaken Sarbanes-Oxley.
We couldn’t agree more. Now, maybe the Times can take on another issue we have raised on these pages: all the SOX Form 52 certifications that CEOs have signed, from Apple and RIM to Nortel and GM, which previously attested to the accuracy of the financial results that are now being restated.