Resources for Sarbanes-Oxley (SOX)
Sarbanes-Oxley Rules Complicate Financial Reports
Even CEOs can't read statements compliant with the law
The goal of the 2002 Sarbanes-Oxley Act was to make corporate accounting more transparent. In practice, a new Cato Institute study finds, the law's requirements have had the opposite effect.
Sarbanes-Oxley sought to achieve its aims by having the Financial Accounting Standards Board (FASB) mandate that corporations use Generally Accepted Accounting Principles (GAAP) in reporting their balance sheets to shareholders. In the Cato Institute Briefing Paper "FASB: Making Financial Statements Mysterious," T.J. Rodgers explains why the GAAP rules complicate financial statements to the point where even CEOs have trouble reading them. Rodgers, a founder, president, CEO and director of Cypress Semiconductor Corporation who sits on the board of several high-technology companies, uses his personal experience to illustrate how these rules obfuscate financial reports.
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