One definition of an accountant is a person who solves a problem you did not know you had in a way you do not understand. Many corporate executives, both in the US and overseas, would happily paraphrase the definition to describe the Sarbanes-Oxley Act. News that the Securities and Exchange Commission will give new foreign equity issuers a year's grace to comply with section 404 of the law, which relates to checks on internal accounting controls, will do little to improve their mood.
The Sarbanes-Oxley Act of 2002 (Sox) was a wide-ranging measure passed to restore confidence after big accounting scandals at Enron and WorldCom. Sox tightened the regulation of auditors, toughened prison sentences for accounting fraud and made corporate executives take personal responsibility for the accuracy of their companies' accounts. To an outraged legislature and public it seemed a suitable response to the rapacious practices of certain executives.
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