In 2001, The fallout from the Enron scandal led to new legislation that is creating a regulatory mess. T.J. Rogers has an explanation that is better than others I have seen. The legislation is called Sarbanes-Oxley and was written by Democrats early in the Bush Administration. The chance of anything useful being done about this in the new administration is approximately zero.
Tags: accountingl, Sarbanes-Oxley, venture capital
Another case of being our own creators of our demise. Sarbanes-Oxley is the number one enemy of small business. The cost of compliance is not that much different from much larger companies that can absorb it. Some have noted that large cap companies are not complaining vehemently for they know it is just one more advantage of size. But they turn around and complain about not being able to compete on a global basis because of just such regulatory overhead along with god knows how much other bureaucratic and legal claptrap that afflicts US and European countries as they give way to the new capitalist. One interesting exception is India which has more onerous bureaucratic nonsense than even the US. And that’s not easy to accomplish. But I have faith in the new Dem crowd in Congress to close that gap. With GAAP, of course. Was really surprised to learn that the FASB is really just 7 theoretical accountants dedicated to bringing opacity and inscrutability to the US corporate structure from a small building in Connecticut. Too lazy to go find out how they are chosen. Maybe best if I don’t know.