Sarbanes-Oxley Info for Philippine Call Centers
SOX in this case refers to Sarbanes-Oxley. In a BusinessWeek article :
Section 404 of the Sarbanes-Oxley Act is the corporate equivalent of root canal. Big public companies spent thousands of hours and an average of $4.4 million apiece last year to make sure that someone was looking over the shoulder of key accounting personnel at every step of every business process, according to Financial Executives International (FEI). Designed to nip accounting problems in the bud before they blossom into fraud, Section 404 is a core provision of the 2002 corporate-reform law. The number of companies that disclosed serious chinks in their internal accounting controls jumped to 586 in the first four months of 2005, compared with 313 for all of 2004, according to Glass, Lewis & Co., a financial research firm.
How did this come about? An article in New Yorker explains it thoroughly:
In the summer of 2002, with the stock market tumbling and fraud at Enron and WorldCom dominating the headlines, there was immense political pressure on Washington to restore investor confidence by doing something about corporate crime. Scrambling to deflect charges of indifference to the plight of widows whose 401(k)s had vanished, Congress hastily wrote and passed the Sarbanes-Oxley Act (dubbed SarbOx), a tough piece of anti-fraud legislation. A Republican-dominated Congress might have been expected to oppose costly business regulations, but politics made SarbOx a thoroughly bipartisan affair. The bill passed unanimously in the Senate, and, when President Bush signed it into law, he proclaimed the end of an â€œera of low standards and false profits.â€
“Washingtonâ€™s pride in SarbOx, though, was not universally shared. Businesses hated the complexity of the new rules (which, among other things, required corporate executives to certify all the financial results of their companies). Economists fastened on the inefficiency of many of the lawâ€™s provisions. Stephen Moore, the founder of the Club for Growth, recently called the law â€œa new cancer,â€ and the former chief financial officer of GlaxoSmithKline deplored it as an â€œAmerican nightmare.â€ SarbOx, the argument now goes, is a classic example of government overreaction. Its heavy costs outweigh its meagre benefits, standing in the way of the marketâ€™s efficient allocation of capital. The Securities and Exchange Commission is now talking about loosening enforcement of the regulations, while lobbyists are pushing Congress to revise the bill in the year ahead.”
The new requirements by the US Government by way of SOX may open up new avenues of service offerings by outsourcing firms. Although some sectors (Ideablog) are now arguing that the social cost of SOX may NOTÂ outweigh the benefits, in this article
Â “I have a number of problems with the argument.Â First, while the article does offer empirical support for the social costs of corporate fraud point, it offers no empirical support for the conclusion that the benefits of SOX outweigh the costs of SOX.Â Second, it assumes that SOX would have prevented the fraud at WorldCom.Â Third, it fails to discuss how the social costs of SOX, including the loss of market value to firms following enactment, SOXâ€™s disproportionate impact on small companies”