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'Enron Day' Marked By Major Corporate Governance Conference

Submitted by: Institute of Internal Auditors, The

Categories: Corporate Governance

Posted: Oct 18, 2002 – 12:00 AM EST

 

Oct. 18 /CSRwire/ - NEW YORK, New York - The Institute of Internal Auditors and a blue-ribbon team of trade associations sponsored a highly-successful corporate governance summit conference in New York City earlier this week. The conference took place on October 16, exactly one year to the day after which the problems at Enron were first made public.

Speakers from both the public and private sectors told a standing-room-only audience how the Sarbanes-Oxley Act and implementing activities at the SEC and stock exchanges are changing corporate roles and responsibilities.

Keynote speakers included Hank McKinnell, Chairman and CEO of Pfizer Inc. and Pete Peterson, Chairman of the Blackstone Group, the Federal Reserve Bank of New York, and The Conference Boards Commission on Public Trust and Private Enterprise.

McKinnell noted that it was incumbent upon management, directors, auditors, and their professional associations to pull together to restore Americas faith in its business institutions. McKinnell went on to say that regaining public confidence in its corporations required a focus on three old-fashioned values: honesty, transparency, and fairness. He noted that new laws and regulations are no substitute for voluntary adherence to such fundamental precepts of behavior.

Earlier in the day, representatives from the Senate and House, the Securities and Exchange Commission, and the New York and Nasdaq stock exchanges discussed how the new corporate governance law -- the Sarbanes-Oxley Act of 2002 -- is being implemented by the regulatory bodies.

In introducing this panel, former Congressman Larry LaRocco noted that: while some here today and across the country can and do disagree with certain provisions in the Sarbanes-Oxley Act, no one can fault Congress for putting aside partisan differences in an honest attempt to deal with the eroding public trust in private enterprise.

The forces leading up to Sarbanes-Oxley were the legislative equivalent of a perfect storm, LaRocco said, and we should thank those at the helm for their calm heads and steady hands.

The assembled group of corporate leaders also heard from directors, internal and external auditors, and a panel of New York Life officials on how they are coping with the changed environment.

In the days final session, Itzhak Sharav of the Columbia Business School said that proper implementation of the Sarbanes-Oxley Act could mark a watershed in corporate governance.

The number and magnitude of corporate failures over the last year provided the impetus for the acts enactment, Sharav said. The failures occurred for a number of reasons, but a common thread was ineffective corporate governance.

Sarbanes-Oxley has the potential to put an end to the sordid chapter that we have just been through, he said. There is reason to believe that [external] audit failures will diminish in the future. Assuming that the new law is faithfully implemented, chances are that the crass pressure on [external] auditors to compromise their standards will lessen, since, unlike in the past, the chief executive officer and the chief financial officer of each public company must certify their companys periodic filings with the SEC -- under the threat of both civil and criminal sanctions, he said.

Public accounting firms will now be overseen by a strong oversight board that is independently financed and able to impose penalties ranging up to $15 million, he noted. An intentional violation of auditing standards in this new, and as yet untested environment, may be tantamount to committing professional [suicide], Sharav said.

The Corporate Governance Summit Conference was sponsored by The Institute of Internal Auditors in partnership with the Business Roundtable, Financial Executives International, and the National Association of Corporate Directors. The event was hosted by the New York Life Insurance Company.

For more information, please contact:

Al Holzinger Institute of Internal Auditors
Phone: (407) 937-1225
Fred H. Hutchison F. H. Hutchison & Co.
Phone: (301) 601-3777

 

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