These questions framed a discussion held late last year in London involving: Colleen A. Sayther, president and CEO of FEI; David Watts, partner, KPMG Management Assurance Services in the United Kingdom; and William Plant, CFO, Oracle EMEA (Europe, Middle East, Asia). Oracle was the sponsor of the panel, which was moderated by Brian Gregory, ERP Director of Marketing, Oracle EMEA.

Sayther reviewed Sarbanes-Oxley's impact on FEI members and other U.S. companies, summarizing what she saw as the good, the bad and the ugly aspects of the law. Good? She pointed to the law's overall intent of restoring investor confidence, noting that "the best thing is the attention that has been placed on internal controls, and some other corporate governance issues." That, in turn, has enhanced the value of the CFO, she said, because "controls are things that finance is very good at."

Other positive features, Sayther noted, include: improved vigilance by boards of directors; requiring financial experts on audit committees; and the formation of the Public Company Accounting Oversight Board to oversee the accounting industry.

But Sarbanes-Oxley clearly has bad aspects, she said, such as the unexpected level of effort needed to comply, which has apparently inhibited corporate risk-taking. Other unhappy developments, she said, include a surge in earnings restatements and increased market dominance by the Big 4 accounting and auditing firms.

Truly ugly developments, she said, include the cost of compliance, particularly for Section 404, which covers internal controls and attestation about those controls. "The cost of being public is up, and the benefits are down," Sayther said. As a result, boards of directors are meeting more often, and directors and officers' insurance costs are skyrocketing.

Asked about the law's effects in Europe, David Watts said the initial reaction was "fairly negative," with many foreign filers looking for significant concessions. He added that Europe's "remoteness from the U.S." and the fragmented nature of foreign registrants tended to make foreign firms react more slowly.

Watts said that acceptance of the new law grew as the months went on, especially as non-American directors of U.S. corporations returned to Europe with challenges to their domestic registrants - and as it became clearer that U.S. regulators weren't willing to offer concessions." By the second quarter of 2003, "tangible responses were evident, especially on Section 404," he said, with organizations appointing advisers for technical support and seeking updated information.

Many foreign registrants are looking to have their Sarbanes-Oxley processes done by end of 2004, leaving time for fine-tuning and remedial action before the 2005 deadline, he said. Watts agreed that there are "positive features" to compliance, including "the active dialogue and engagement of advisers, as well as the opportunity to observe what is happening in the U.S." His advice to laggards? "There is still time, but it's running out. You need to speak to your auditors, and you need to do so now."

The third panelist, William Plant, spoke about Oracle's experience with the new law, referring frequently to Oracle's earlier effort to establish common controls for its 32 subsidiaries in Europe. "We did realize we needed to centralize some things," he said. "At the beginning, we wanted consistent management accounts, rather than a shared service approach." As the effort evolved, the company merged these 32 units into consistent standards, as well as into one global reporting instance.

Five years ago, Oracle established the concept of "global process owners," who took oversight of specific processes, such as payables or orders to cash, Plant said. From 42 such process owners, the number has been whittled down to nine, he added.

Sarbanes-Oxley forced the company to revamp its processes, which in some cases had been outmoded, he said. "It was a great opportunity to look at the whole thing again, take the best improvements we had and put them into these systems." A major accounting firm will be seeking to validate these controls, he added, and internal audit will test them as well.

JEFFREY MARSHALL is Editor-in-Chief of Financial Executive.

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FEI's flagship publication, Financial Executive magazine, has won another award -- an Eastern Regional gold (first place) award from the American Society of Business Press Editors (ASBPE) in their annual competition. FE won in the editorial division for its March 2002 special section on "Best Practices." This is the fourth juried award FE has won in the past two years. The award was presented in Boston on Monday, June 9.