From my viewpoint the primary impact of S-Ox is to keep me employed. Both data security and auditing positions have been bolstered up to support this additional piece of govermental interference. Hell, I still trust big corporation more than the government.

The only benefits I see to SOX are:
(1) It removes the “Sgt. Schultz” defense from senior management (although Scrushy got away with it). The certification by management alone would cover this, and do it cheaply.
(2) It puts the surviving “Final 4″ accounting firms on the hook for doing the job they should have been doing in the first place.

Enron required the active participation of Arthur Andersen in setting up the special purpose entities used in hiding the off-balance sheet debt. Worldcom just needed Andersen to be incompetent. I mean, capitalizing expenses as assets? Hello? Is this supposed to be a new way of cheating? Or has it just disappeared from the curriculum since I went to my first accounting class?

Until they force audit firm rotation on the big companies, a good bit of the risk is still there. SOX gave the auditors both a motive and a means of standing up to a sleazy CEO, but guess who still signs the checks?

1) The new procedures companies have implemented as part of the required internal controls review will increase the accuracy of the financial statements of large companies on a micro-level — that is, there will be fewer lost invoices, double-paid invoices and things of that nature. But those types of errors do not have a material effect on the financial results of a large company and fixing them will never repay the costs of compliance — if the cost-benefit of doing so were positive, companies would have done so without a law.

2) The increased focus on auditors will probably result in better accounting practices in some instances, preventing some errors in financial statements. But this will have a material effect on the financial results of only a few companies — in no way offsetting the substantial increase in auditing fees over the market as a whole.

3) Those who want to commit fraud will continue to do so. The reasons executives commit fraud have not changed. I really doubt those who were committing fraud in the past thought “well, if I get caught the only thing that will happen is I’ll lose my job, all my money, and any chance of any future career, but at least I won’t likely go to jail.”

SarBox is one more instance of Congress passing a law with absolutely no concept of what it actually means. The funny thing is, there is not a single federal agency — including the Securities and Exchange Commission by its own admission — who could come close to complying with SarBox. Yet the people who run these agencies face no risk of jail time (or probably even getting fired), no matter how grossly negligent they are in keeping their books.