Thinking Outside the SarbOx
It’s always a delight to see our research trumpeted by the presidential candidates. But resident SarbOx scholar John Berlau must have been particularly pleased to see his arguments picked up by Republican presidential candidate Ron Paul, 1 of only 3 congressmen to vote “no” on Sarbanes-Oxley in 2002.
Quizzed about a recent SEC move to reform Section 404, a controversial internal controls provision, Paul relied on an extended Berlau quote for the nitty gritty details, then pressed for a full SOX repeal based on constitutional and economic grounds.
Ron Paul: No, the Securities and Exchange Commission’s new regulations implementing Section 404 do not go nearly far enough in lifting the unjustified burdens Sarbanes-Oxley imposed on America’s economy.
Sarbanes-Oxley expert John Berlau, director of the Center for Entrepreneurship at the Competitive Enterprise Institute, said of the new rule that “Simply proclaiming that audits should be â€˜risk-based’ won’t make them so, as long as the other mandates of this auditing standard remain in place. Auditors and companies will still face potential liability for not looking at every last process that could be deemed an â€˜internal control,’ even if it has little relevance for shareholders. And the big accounting firms will also still have the big incentive to find every last â€˜internal control’ they can audit and bill for.”
Of course, the regulators can only go so far in relieving the burden of Sarbanes-Oxley; it is up to Congress to correct the mistake it made when it rushed this unconstitutional, anti-prosperity, and anti-liberty bill into law.