BUSINESS Special Report


President Bush calls for stiff penalties for corporate crime in a speech on Wall Street in July 2002. (AP)
Deals: Allan Sloan
 Celebrating Reform Act With Skepticism
Taking stock on corporate scandals a year after the reform act became the law of the land.
• Washington Post Editorial: Corporate Reform, Year One
• Special Report: Corporate Ethics

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SEC Rules Address Conflicts of Interest
On the eve of the one-year anniversary of the Sarbanes-Oxley corporate-reform bill, the SEC on Tuesday approved new rules intended to eliminate conflicts of interest between stock analysts and investment bankers.
• Transcript: Accounting Reform
Surviving the Accounting Reform Upheaval
Ernst & Young's experience reflects the difficulty of change at a massive company a time when new rules are not yet written, key court cases have not been decided and scandals keep erupting.


About Sarbanes-Oxley Act
Background
 In the wake of corporate scandals at Enron, WorldCom and other public firms, Congress passed the Sarbanes-Oxley Act to crack down on securities fraud, boardroom scandals and tighten regulation of accounting rules.
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Highlights of Sarbanes-Oxley
 • Creates Public Company Accounting Oversight Board.
• Prohibits accounting firms from providing some consulting services to companies they audit.
• Expands definition of obstruction of justice. Read Post Article
• Requires corporate managers to sign off on financial reports to attest that adequate controls are in place to detect mistakes and fraud. Read Post Article
• Requires companies to create and disclose a code of ethics and to have a financial expert on the board of directors. Read Post Article
• Requires companies to provide more information to investors when reporting "pro forma" numbers, or figures that aren't in accordance with standards used for financial statements filed with the SEC. Read Post Article
• SEC: Tips for Investors on "Pro Forma" Financial Information
Accounting Oversight Board
The Sarbanes-Oxley Act created the Public Company Accounting Oversight Board to regulate the accountants who audit public companies. The board consists of two members that are certified public accountants and three non CPA-members. Read Post Article

Responsibilities of the Board:
 (1) register public accounting firms.
(2) establish standards for the preparation of audit reports including quality control, ethics and independence.
(3) conduct investigations of accounting firms, disciplinary proceedings and impose sanctions.

Members of the Board:
 William J. McDonough - Chairman
Kayla J. Gillan - Member
Daniel L. Goelzer - Member
Bill Gradison - Member
Charles D. Niemeier - Member

Source: Public Accounting Oversight Board web site

On the Web
 • Full Text (pdf): Sarbanes-Oxley Act
• American Institute of Certified Public Accountants (AICPA)
• Securities and Exchange Commission (SEC)
• SEC: Online Publications for Investors



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