Released on: March 18, 2008, 6:19 am

Press Release Author: jaswalbhisham

Industry: Education

Press Release Summary: The Sarbanes-Oxley Act, also called the Public Company
Accounting Reform and Investor Protection Act of 2002 was signed into law on July
30, 2002 by President Bush. In the aftermath of Enron, Arthur Andersen, Global
Crossing, and WorldCom, SOX promises greater corporate accountability and
transparency. Named after Senator Paul Sarbanes and Representative Michael G. Oxley,
SOX focuses on the importance of ethical behavior in corporate governance-across the
United States and now.overseas.

Press Release Body: The Sarbanes-Oxley Act, also called the Public Company
Accounting Reform and Investor Protection Act of 2002 was signed into law on July
30, 2002 by President Bush. In the aftermath of Enron, Arthur Andersen, Global
Crossing, and WorldCom, SOX promises greater corporate accountability and
transparency. Named after Senator Paul Sarbanes and Representative Michael G. Oxley,
SOX focuses on the importance of ethical behavior in corporate governance-across the
United States and now.overseas.

All countries have government-required laws like Sarbanes Oxley. In the UK, it's the
\"Combined Code on Corporate Governance,\" in The Netherlands it's the \"Code
Tabaksblatt,\" Germany has a \"Bilanz Reform\" and a \"Bilanz Kontroll Gesetz.\" But
then, why do we need SOX overseas since we already have the required laws? It's
because companies with U.S. headquarters must ensure that all foreign outposts meet
federal standards. This is the major cause of concern in the management and
accounting circles. According to some experts, the Sarbanes Oxley Act might have
dictated convoluted rules and regulations on the U.S. businesses. While the rules
are concrete ideologies that prevent accounting scandals, the constant flux in the
policies confuses businesses around the globe.

SOX compliance by vendors and business partners outside the U.S. is a frightening
task. The risks and complications involved in enforcing the regulations for multiple
firms around the world are enormous. The U.S. firms should keep themselves abreast
of the data operations and data management followed by overseas vendors. This
complicates the case further as the data should be integrated in financials or
entered in balance sheets. Cumbersome processing of data would step up IT-related
expenses.

The global impact of SOX is tremendous. At the moment, the UK Big Four firms are
feeling SOX repercussions in their consulting sectors. http://www.big4.com -a
website for global Big4 alumni - receives periodic updates on the latest news and
trends at the Big Four firms. The Big Four in UK reportedly lost GBP250 million in
consulting fees since 2002-a direct outcome of Sarbanes-Oxley Act. Among the Big
Four firms, PricewaterhouseCoopers faced a huge decline in their consulting fees.
Causes for this decline can be attributed to:
.The increased cost of compliance that usurped consulting budgets.
.Independence restrictions in Sarbanes-Oxley have restrained companies from
utilizing their auditors for many consulting services.

There is an apparent role reversal in consulting fees and audit services. If
consulting fees have declined, audit fees have considerably increased. A whopping
30% increase in Big Four audit fees has been observed over a period of two years.
This spike does not compensate for the revenues lost for consulting. Consulting was
the major strength of the Big Four in the UK. But, in the present conditions, the
significant decline in consulting fees clearly demarcates the performance of the Big
Four in the UK.

According to a survey by a European firm, many overseas firms with their shares
listed in the U.S. were not ready to meet the deadlines of Sarbanes-Oxley. Since
European firms already have specific regulations, SOX compliance is extremely
difficult. Some overseas firms have been attempting to get delisted from the U.S.
stock markets since SOX's inception. Foreign firms about to get listed on overseas
exchanges are also resisting to get listed in the U.S. These problems would take
toll on the U.S. market performance and economy. But, the exit of foreign firms from
the U.S. exchanges is not that easy. As per SEC guidelines, foreign firms holding
300 or more shareholders in the U.S. cannot delist from the U.S. exchange where they
trade.

In the light of these problems, the Securities and Exchange Commission-in its bid to
offer sustained flexibility-started modifying rules for overseas firms listed in the
U.S. The SEC would facilitate foreign firms to delist their securities that are
traded on the U.S. exchanges. Modifying SEC rules to accommodate European firms
would create a state of unrest among the American managements.

The SOX compliance should be an "all-encompassing" formula-that which enables
governments and managements worldwide to function efficiently and in rhythm. A level
headed approach to weed out this disconcert would improve the situation.


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