Smart Tech Tips

This is the Public Company accounting Reform and Investor Protection Act of 2002, or SOX in short. This was a reaction to scandals that cost investors billions of dollars.

What this act did was create the Public Company Accounting Oversight Board which oversees the accounting firms and their roles in public companies.

This is all good fun for big companies who have lots of money to throw at this new regulation. For smaller companies, the cost of honoring this assessment is high. Also foreign firms do not have to abide by this rule and is a concern that it drives businesses out of the US.

The one focus I wants to point out is this law has an adverse effect on IPOs; specifically those that are common in silicon valley. Since the enactment, it has been difficult for venture capitalist to get back their investment in upstart by making it harder for them to go public.

I read on the net where technologist are against this act and want it repealed. I would have to agree. This act will not stop corporate fraud. It just creates another hurdle for small businesses or upstarts.