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President Bush |
President George Bush has criticised the implementation of the US's corporate governance bill, the Sarbanes-Oxley Act, but opposition still says that too little is being done.
Last Wednesday, in his State of the Economy speech, given to an audience of Wall Street bankers, Bush commented that, although he believed that Sarbanes-Oxley had improved investor confidence, it and its much-criticised Section 404, which prescribes controls on anything that can effect financial reporting, had been expensive for companies to implement. He said, "The principles of Sarbanes-Oxley are as important today as when they were passed. Yet complying with certain aspects of the law, such as Section 404, has been costly for businesses and may be discouraging companies from listing on our stock exchanges. We don't need to change the law. We need to change the way the law is implemented."
Bush praised the efforts of Treasury Secretary, Hank Paulson, and SEC Chairman, Christopher Cox, saying "I'm pleased of the progress that [they] are making to make sure the regulatory burden is not oppressive, and fair, and helps us meet a great national objective to keep the United States the economic leader in the world."
However, Free Enterprise Fund Chairman, Mallory Factor, said "Without bold reform, the United States cannot remain competitive with London, the European Union and Asia. Since the Sarbanes-Oxley Act became law, costs to businesses in the United States have been considerable. Compliance with audit requirements of section 404 has cost U.S. corporations $35 billion annually, versus original SEC estimates of $1.24 billion. I urge President Bush to reconsider the negative impacts of Sarbanes-Oxley and take action that will have a lasting impact".
The Free Enterprise Fund has partnered with a US accounting firm to bring a law suit against the Public Company Accounting Oversight Board, the public body set up by the SEC to enforce Sarbanes-Oxley.
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