Accountants in the supreme court

posted by on 2009.12.08, under News

There is a huge trial going on in the Supreme Court that will drastically impact business in the US.  After the corporate scandals and accounting fraud from the Enron days (2002), Sarbanes-Oxley (SOX) act was passed  to protect investors from being lied to again.  There has been controversy surrounding this law since was passed, The Wall Street Journal estimates the law costs our economy $1 trillion since it was passed, and that 20% of public companies were considering going private because of SOX.

The trial is between Free Enterprise Fund v. Public Company Accounting Oversight Board and an accountant named Brad Beckstead.  Beckstead believes that the governing board should be appointed directly by the President, not the SEC, turning the issue into a separation of powers issue.  If the court rules in Beckstead’s favor, than the entire SOX law will be brought down, because it does not have a “severability clause” (law is invalidated if one clause goes down)

It will be interesting to see what happens with this.  It is generally agreed upon that SOX was put together hastily after the scandals in the early 2000’s, perhaps to restore investor confidence. None the less, the intention seemed to be for the welfare of the economy and the vital investors that keep it afloat.  Rahm Emmanuel had mentioned taking actions to reform the act, to help small businesses out.  If SOX goes down completely however, there might be a window of opportunity for creative accountants to take advantage of the lack of regulation..  There could be terrible consequences to the recovery of the economy if certain people get greedy again.  I am interested to hear from accountants how they feel about this….I am guessing that there will be mixed feeling, as I understand many jobs were created in auditing from the law, but it has also seemed to be a nuisance to professionals in the industry.

Outside of this accounting issue, I am not convinced that corporate crooks are finished with trying to destroy this country for their personal profit……While flying home for Thanksgiving, I read about what is UBS is doing to Detroit , kicking the city when it is down, cashing in on $400 million break-up fee from an unethical “exotic derivitive” investment it swindled the city into.  Detroit is now spending $4.2 million extra a month to pay this debt, before they can spend a dime in education, city utilities, or any recovery effort to try to fight the 28% unemployement rate.  This is going on all over the place, and I personally am disgusted to hear about it.  Weren’t these the same financial institutions that were begging for tax money to bail them all out?  Why am I not getting text messages from CNN at 5am about this kind of stuff, but instead getting constant updates about Tiger Woods love affairs?

A quote from a phenomenal movie NETWORK is appropriate here,
“I’m mad as hell and I’m not going to take this anymore!”

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