Tuesday, March 06, 2007

Glass Lewis Gives Three Cheers for SOX over Restatements

Research firm Glass Lewis found that restatements jumped over 1500 for the first time in 2006. Almost one of ten public companies restated and Glass Lewis found that the increase was in spite of a decrease in restatements by companies previously subject to Sarbanes-Oxley provisions. Not surprisingly, Glass Lewis was supportive of SOX and even criticized the SEC and PCAOB for considering modifications to internal control provisions, suggesting that pressure to make the changes was driven more by desire for less scrutiny than by extra cost. An additional finding, companies audited by non-Big Four firms, such as BDO Seidman, were more likely to be restated than those audited by Big Four firms such as Ernst and Young.

This research will certainly add ammunition to those favoring present SOX provisions for all publicly-traded companies. Guess my dad would say to the restaters: "If it is worth doing, it is worth doing right the first time."


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