Wednesday, January 16, 2008
Sarbanes-Oxley and innovation
There is much truth, Grasshopper, in the email at the end of this post. The "separation of duties" requirements of SarBox, at least as interpreted by most of the people charged with implementing them and auditing them, make it very difficult to do anything without having a conversation about it. Why? Because every act requires two people. That does indeed make it much harder to commit fraud, but it also makes it much less likely that people will take risks in the workplace because edgy decisions have to be approved ex ante. The result is that in America's public companies it is no longer possible for daring and creative people to "beg forgiveness" afterward in lieu of getting permission in advance. That certainly reduces the risk of liability, which is a good thing for those of us in the defendant class, but it does so by reducing risk, which walks hand-in-hand with rate of return.
3 Comments:
By 
, at
Wed Jan 16, 02:35:00 PM:
As the owner of a software company, we've transformed our former cubicle style floor plan for our engineers to large bullpen arrangements, organized by product teams. They like it a lot more, if for no other reason than it has fostered communication. We have taken to holding regular meetings for our engineers where we talk over each of our major customer sales motions, and our competitive position by product. Each year we take a couple of developers to trade shows, and we take the bulk of our engineers to our annual customer meeting. As a private company owned by an active owner (moi), we care not a whit about butt-covering and we care loads about taking chances, so the issue you describe literally never comes into our company equation.
Our software developers absolutely love these things, from which I conclude that everyone gets as much of a thrill as an old sales guy like me from kicking the competition around, and also the communication.
As a venture investor in a second software company offering a leading Sarbox policy definition/dissemination/trining/case tracking platform, my sense is that the problems the law presents have not gotten any simpler to administer over time, and that our customers are increasingly exhausted by the problems surrounding compliance. This is a law whose provisions haven't become better operating after time and usage, and it is driving away capital raising to foreign markets. It'll have to change.
Andrew
By , at
Wed Jan 16, 04:47:00 PM:
Are Unions required to follow SOX?
Just curious. My daughter belongs to one and I noticed on the envelope that the executive officer is also the financial officer and secretary.
By 
TigerHawk, at
Wed Jan 16, 04:54:00 PM:
No. The Congress has not seen fit to regulate non-profits, even though the stakeholders in non-profits have far less influence of their management than the shareholders in a public company.
