Today, Washington’s financial watchdog, the Securities and Exchange Commission, gave its clearest signal yet that it could offer exemptions from measures in the controversial Sarbanes-Oxley Act on corporate governance.
Speaking at a conference of businessmen in London, Alan Beller, director of corporation finance at the SEC, said exemptions were being considered for foreign auditors, adding that the Act had been written with provisions to limit the cross-border effects of the legislation.
However, Beller made it clear that British CEOs and finance directors of companies listed in the US would have to continue with the so called ‘oaths of honesty’, certifiying their accounts as accurate and true. Speculation that these might be watered down were unfounded, he said.
Section 106 of Sarbanes-Oxley specifically compels auditors, whether in the US or overseas, to provide copies of their working papers. It also brings them under the jurisdiction of US courts for enforcement purposes.
Sarbanes Oxley has proved intensely controversial in the UK because of its cross border measures. It means most of the act, which is intended to improve corporate governance in the US following the massive scandals at Enron and WorldCom, also applies to non US companies with shares issued in the States.
At the London conference Beller, responsible for much of the implementation of Sarbanes-Oxley, said: ‘There was report on one of the wire services that suggested the SEC was proposing some accommodations on the certification requirement for non-US issuers. It’s not true. The certification requirement set out in our rules is identical for US and non-US companies.’
Beller reiterated the SEC’s view on exemptions for non-US auditors stated during a satellite broadcast made by the watchdog’s chairman, Harvey Pitt, to CEOs and finance directors in London.
He said the ‘SEC will explore the issue of whether there is a basis and a need for exempting foreign firms.’
The US is coming under increasing pressure from Britain to reconsider measures in Sarbanes Oxley. The UK believes it already has strong corporate governance rules, which the US failed to consider.
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