Originally published February 12 2006
Publicly owned companies continue to have accounting problems
by Mike Adams, the Health Ranger, NaturalNews Editor
Even with new and expensive laws in place to tighten corporate oversight, publicly owned companies continue to have serious accounting problems. Studies show there is still little overall correlation between performance and compensation.
Even as the former top executives of Enron head to a climactic criminal trial soon, the impact of the company's ignominious collapse on the behavior of corporations across America has begun to show its limitations.
Despite an array of new and expensive laws and regulations that were adopted to tighten corporate oversight after the wave of scandals earlier in the decade, publicly owned companies have continued to be troubled by serious accounting problems.
In the last year, a record number have been forced to fix erroneous earnings statements by issuing corrective ones, a move that often led to sharp stock declines.
Moreover, despite the widespread criticism of the high pay of executives at Enron and other companies that later proved derelict, studies show that there is still little overall correlation between the performance of many companies and the executive compensation that is set by their directors.
Christopher Cox, the new chairman of the Securities and Exchange Commission, said in an interview last week that a number of benefits have flowed from the changes in laws adopted after the major corporate scandals, which plagued companies like WorldCom, Tyco, Adelphia and Qwest as well as Enron.
In the interview, he disclosed that he intended to lead a commission effort early this year to rewrite the rules to force companies to provide more details about executive pay.
Despite a recent backlash by some corporate interests against the tighter rules, Cox said it "would be a mistake" to roll back the major provisions of the Sarbanes-Oxley Act of 2002, the congressional response to the corporate scandals, which imposed new obligations on directors, accountants and lawyers.
The restatements often involved plain accounting issues, like when to recognize earnings or properly calculate interest accruals.
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