Wednesday PM May 23rd, 2007
by: Ed Mayberry, May 23, 2007 5:05:00 am
The Securities and Exchange Commission has unanimously approved new guidance to help companies comply with provisions of the Sarbanes-Oxley corporate reform law. Section 404 requires companies to assess their internal controls over financial reporting, calling for auditors to report on management's assessment and on the controls themselves. Critics have argued the requirements were too expensive and have asked the SEC to make it easier for companies to comply. Jim DeLoach is with Protiviti.
"So now management has guidance. It does not need to rely on an auditor-directed standard. And therefore, this enables the SEC to more clearly separate the roles and responsibilities of management and the auditors so management can focus on what it has to do and the auditor on what he or she needs to do." Ed: "Have the changes that have been made today made this a less burdensome or less costly process for businesses?" "The SEC clearly saying the fact that this would be less costly, not just for the companies that have elected, have already complied, but for companies of all sizes." Ed: "So basically they get to sort of pinpoint the risks for their particular kind of business." "That's precisely right, Ed, I think that captures really what the SEC is trying to do—both managers and the auditors focus on what the critical risks are, on what really matters, what can really impact and potentially result in a material misstatement to the financial statements."
The new guidance allows managers to identify the highest risks to their books as opposed to forcing them to test a long list of controls. The Sarbanes-Oxley Act followed book-cooking scandals by Enron and others.
A former Royal Bank of Scotland banker killed himself over fears he could be extradited to the United States to face trial, according to an inquest at Walthamstow Coroner's Court in London. The Daily Mail reports that Neil Coulbeck, a former executive at the bank which owns NatWest, slit his wrists in Chingford Park near his home last summer, after becoming depressed and suicidal from reading about the NatWest Three case last year. Former colleagues David Bermingham, Gary Mulgrew and Giles Darby will stand trial in Houston this October for alleged fraud in connection with the collapse of Enron. Coulbeck had been interviewed by the FBI, although he had been assured he was in the clear. Coulbeck is reported to have been the executive who authorized the transfer of Enron assets to the investment vehicle operated by the three, although there was no suggestion he had profited personally from the transaction. Coulbeck was the author of The Multinational Banking Industry, published in 1984.
The widow of former Enron Chairman Ken Lay is asking a judge to throw out the government's push to seize nearly $13 million in cash and property, according to the Houston Chronicle. The government alleges that Ken Lay gained about $99 million from criminal activity, repaying Enron loans with company stock throughout 2001 when the company was in financial turmoil. Prosecutors say they can trace $12.7 million, which includes $2.5 million Lay used to pay off a condominium mortgage. Lay died six weeks after being convicted of fraud and conspiracy. A judge erased his convictions because Lay died before he could appeal.
The Port of Houston Authority has approved more than $2 million in contract amendments and bids and proposals for projects related to the Bayport Terminal Complex Phase 1. That includes expenditures for cruise terminal materials testing, a wharf and dredging change order and other contract amendments. Commissioners also approved asking for competitive proposals for security equipment at entry and exit gates at Barbours Cut Terminal.
The port commission this week approved more than $200,000 in legal fees for Vinson & Elkins for work on a contractor lawsuit through the end of March. Another $50,000 in fees was authorized for work done by Kelly Hart & Hallman on the same lawsuit. A hearing is set for next month in a suit filed by Zachry Construction, the main contractor for the Port of Houston's Bayport container terminal. The firm alleges the port slowed the job with last-minute changes, even as it pushed to have deadlines met. Zachry says the port delayed payments that it was due. The San Antonio-based firm was awarded more than $100 million in contracts for the first phase of the new container terminal. It opened in February.