assets

Tough time to serve on an audit committee

Tue, 18 Mar 2008 07:59:59 -0400

We've noted that serving on an audit committee is not an easy gig right now, especially at a financial services firm. Auditors are feeling a certain amount of pressure to take a hard line on mortgage-related assets. In December, the PCAOB issued an alert to auditors on how to calculate subprime losses. Many think that audit committees will feel the need to go overboard in writing down assets. Investors' Business Daily suggests the advent of FAS 157 may lead more companies to look unfavorably on internal models and suggest draconian writedowns. AIG is an example. Last month, it reported the value of its CDSs fell $4.88 billion in October and November, a figure much larger than its previous forecast; PricewaterhouseCoopers found a "material weakness" in its controls.

For more:
- here's the article via CNNmoney.com

Related Articles:
Audit committees wrestle with new powers. Article
Bank showdown with auditors looming. Article
FAS 157 wreaks havoc with bank earnings. Article

A model of disclosure of subprime risks

Tue, 04 Mar 2008 06:59:59 -0500

Floyd Norris of the New York Times wonders: Wasn't Sarbanes-Oxley supposed to do something about the hidden, off-balance sheet risks? He writes: "The rules require that companies make some disclosures about vehicles off their balance sheets, even if they do not put them on their financial statements. But those disclosures have often not been made, or have been made in such a general way as to be meaningless." The stream of banks facing SIV risks is indeed long. But Norris also notes a solution. He says the 2007 annual report of State Street is a fine example of disclosure done right. It lays out why it has not consolidated its conduits held by off balance sheet entities. More important, it discusses what circumstances would lead the bank to place the assets on its balance sheet.

For more:
- here's the column

Related Articles:
SIVs continue to creak. Article
Bank showdown with auditors looming. Article
Big banks move to clean up balance sheets. Article

Sarbox fueling acquisitions of overseas companies?

Tue, 25 Sep 2007 06:59:59 -0400

Tomas Jandik, associate professor of finance at the University of Arkansas, has looked at Sarbanes Oxley from a foreign company perspective and found that the law may be one factor boosting acquisitions of overseas company. The logic is clear. Foreign companies that want access to the U.S. capital markets for obvious reasons have been stymied somewhat by Sarbox. But that might have led to more of them being exposed to the U.S. markets via cross-border acquisitions. The target company essentially gains the benefits that stem from being subject to U.S. regulations without having to bear the full cost. An interesting concept. This is interesting at a time when overseas assets are expensive.

For more:
- here's the Newswise article

Don't overlook data destruction issues

Mon, 16 Apr 2007 20:01:39 -0400

Many people assume that Section 302 control requirements cover not only data storage but also data destruction. So as you retire old servers and other IT assets, you have to start worrying about how to securely destroy all the data. The last thing you want is for stray information to end up in the wrong hands--or in the news. Chances are you haven't thought much about this. Clearly, an ad hoc policy is dangerous in this era, so you may want to put together a firm policy. Most people say that true data destruction goes beyond hard-drive wiping. Some prefer to wipe hard drives and then deliver them to a third-party and actually witness the pulverization. Some firms will allow customers to watch the destruction remotely over various links. Some rely on "storm cases" to house the drives in transit. All this is worth thinking about--and it could be fun for the IT team.

For more:
- read this InfoWorld article

Prosecutors notch a Sarbox conviction

Mon, 02 Apr 2007 20:01:39 -0400

When you're stuck in the gears of Sarbanes-Oxley compliance, it's sometimes hard to recall what the law was all about. The point was not to generate additional audit work and lots of headaches but rather to prevent--and accordingly deter--fraud. For all the outcry over corporate fraud, there have only been three people charged under Sarbox. The most recent case: Steven Garfinkel of Philadelphia, who was CFO for the now-defunct DVI, pleaded guilty to directing DVI employees to falsify documents and double-list assets to get bigger credits. The crime triggered a $50 million loss to Fleet Bank, which has since been bought by Bank of America. Garfinkel, 64, was given 30 months in federal prison and ordered to pay restitution of $51 million, which he can pay $200 (per month) at a time.

For more:
- here's an update from the Philadelphia Inquirer

Time to leverage compliance for financial goals?

Mon, 01 Jan 2007 19:01:39 -0500

We're firmly in the Sarbanes-Oxley 2.0 era. Many companies have their 404 infrastructure in place; these infrastructures will remain despite all the regulatory changes coming down the pike. At least one vendor (so take it with the appropriate grain of salt) predicts that the coming year will give rise to more companies leveraging their IT-oriented compliance assets to support other efforts. In 2007, companies will start using the many cuts of data the new systems allow to support strategic and financial decision-making. Now this has been something of a grail, discussed often at the big-think level. Many have been touting such non-compliance benefits of Sarbox. But will this year see all this become reality? Well, maybe for some companies. I think it will roll out a lot more slowly, but it is time to start thinking about it, especially given the declining costs of storage. Frankly, it would be a shame if the all the automation were used only for compliance.

For more:
- here's an article from Supply & Demand Chain Executive

Do you have enough storage capacity?

Mon, 11 Dec 2006 19:01:38 -0500

This is hardly surprising: Worldwide, the disk storage market grew 7.4 percent in the third quarter alone. When you factor out all the seasonal influences, the bottom line is that Sarbanes Oxley is driving demand. The need to store and retrieve just about everything has given a big boost to the likes of storage giants like EMC and IBM. The highest growth seems to be in add-on storage products. Now all this suggests that a lot of companies are boosting their storage capacity. It may not be a bad time for you to at least consider this. It's something of a cliché to argue that companies should constantly "inventory your assets." But it might be worth your while to plan ahead. Article