September 24, 2003

New Twists in Convertible Debt

Today is our webcast on novel features of recent convert offerings – subscribers of should check it out live – or by audio archive or transcript!

Reporting Out Next?

The ABA Task Force on Corporate Responsibility has released its final report that was approved at the ABA Annual Meeting back in August. Still no word whether the SEC will act on its outstanding proposal regarding reporting out. Hopefully, the Commission will take some time to observe the impact of its reporting up rules and the ABA’s recommendations before it acts.

By the way, did you notice how I blogged yesterday about the SEC’s tardiness on the PCAOB’s ethic rules – and a few hours later they appeared! Maybe I should wish for 402 guidance from the SEC…

An Accountant’s Perspective of SOX Surprises

Rick Telberg, Editor of Online Content for The CPA Letter, offers his Top 10 Surprises of SOX:

1. There’s new caution in mergers and acquisitions, as public companies fret over uncertain financial liability for the private companies they acquire. Due diligence is costing more and taking longer for both sides in a deal, and some deals aren’t getting done or even being considered because of it. And the law is unclear on whether the public company’s executives will be held accountable for the private company’s history. Deals are taking months instead of weeks.

2. Annual reports, quarterlies and proxies are getting heavier and thicker with detail. But it’s not clear investors, who had a hard time staying awake through the turgid prose before SOX, are absorbing all the new footnotes. General Electric’s latest annual report, for example, weighs in at 160 pages, twice the size of last year’s. Wal-Mart, the superstore, has put out a superstore-sized annual report, three times the size of the previous year’s.

3. After years of stagnation in a flat economy, Sarbanes-Oxley is reportedly fueling salary increases of about 6 percent across the finance function. Cash managers saw the most significant salary increase in 2003, receiving a 10 percent increase.

4. Outside auditors were hit by insult as well as injury through the financial traumas of the post-bubble era. But today the Final Four are bigger and busier than ever. And corporate clients are paying up to 30 to 40 percent more in fees to get up to speed with the new rules and regulations.

5. Financial software companies are enjoying a new bounty of business. Some information technology types are saying this is the best thing that’s happened to their industry since the Year 200 bug was supposed to crash the world’s computers

6. Private companies, supposedly exempt from SOX, are feeling a trickle-down effect. There are few signs that lenders and investors are embracing separate standards for private firms, forcing even smaller companies to ramp up their controls and reporting.

7. Talk about trickle-down. The law was designed to make top executives take personal responsibility, but many are reportedly strong-arming middle-level and lower-level managers to sign off on their reports before sending them upstairs.

8. Second-tier CPA firms were expected to get bypassed in the bonanza of new work sparked by Sarbanes-Oxley. But in the turmoil of more client switches than at any time in the history of public audits, large local firms are picking up a surprising amount of business. Even more surprising: They’ve learned to be careful and are passing up a lot of opportunities if they don’t like the client.

9. After years of declines, many colleges are reporting surges of interest in accounting courses and careers. Suddenly CPAs are sexy again. And whatever happened to the 1990’s panic over a labor shortage? Firms are hiring.

10. And, contrary to worries within the profession that new government involvement and oversight of the profession would usurp the profession’s traditional roles in self-determination, state and national professional associations appear to be as vibrant, active and well-supported by their members as ever before.