7 April 2007

The Sarbanes-Oxley Act of 2002 from: http://www.sarbanes-oxley.com:

Sarbanes-Oxley Act of 2002

To improve quality and transparency in financial reporting and independent audits and accounting services for public companies, to create a Public Company Accounting Oversight Board, to enhance the standard setting process for accounting practices, to strengthen the independence of firms that audit public companies, to increase corporate responsibility and the usefulness of corporate financial disclosure, to protect the objectivity and independence of securities analysts, to improve Securities and Exchange Commission resources and oversight, and for other purposes.
 
SarbOx, Section 404 (a)

Management Assessment of Internal Controls
(a) RULES REQUIRED- The Commission shall prescribe rules requiring each annual report required by section 13 of the Securities Exchange Act of 1934 (15 U.S.C. 78m) to contain an internal control report, which shall--
(1) state the responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and
(2) contain an assessment, as of the end of the most recent fiscal year of the issuer, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting.

Because 7 April 2007 is Good Friday, the Market is closed and so Nightly Business Report on PBS decided to devote their episode to the Sarbanes-Oxley Act of 2002 (SarbOx).  In their report, they provide background reasoning behind the Act and guest host Lynn Turner, Director of Research of Glass Lewis; Alex Pollack, Research Fellow of American Enterprise Institute; and the President of the AICPA, among others.  The reporters brief the viewer on the Enron and the Worldcom scandals and thus, the need for public companies to restore their investors’ trust and confidence.  They go on to concentrate on a cost-benefit analysis of the Act and particularly, its Section 404.  Within the report, they also compare the cost-benefit of Section 404 between a smaller public company (World Bear that eventually went private) and a larger public company (Office Depot), explaining that the Act’s benefit exceeds costs for the latter while it did not for the former, before it went private.  Although there is quite a bit of disagreement amongst the guests of the show, they do agree on the principal effect of the Act: to maintain a standard of accountability and transparency of financial markets to re-establish investor trust.  The result: a steady rise in company earnings on the Dow, the S&P 500, and in NASDAQ, shortly after its passage in 2002.

On 3 April 2007, The New York Times published Cornelia Dean’s article on the occurrence, the levels, and the cost-benefit analysis of research on pharmaceuticals and personal care products (PPCPs) in the nation’s rivers, “Drugs Are in the Water.  Does It Matter?”  Apparently, trace residues of “birth control pills, antidepressants, painkillers, shampoos and a host of other compounds” unspecified are present in our waters at unknown levels and at a yet unknown consequence to humans, despite the fact that research and detection began in 1999.  Unfortunately, the pollutants are not limited to the U.S. alone - the British government reported detection of the chemicals in their rivers in 2004. 

Although the article is vague on the effects of the contaminated waters because the ‘experts’ are themselves unsure, Dean does mention that “researchers at the United States Geological Survey…discovered ‘intersex fish’ in the Potomac River and its tributaries.  The fish…were male but…carried immature eggs.”

Great!  Mutant fish.  Is this sci-fi or is this our new reality? Please, give me  virtuality.

In her article, Dean includes varying expert opinions.  Joel A. Tickner, environmental scientist at the University of Massachusetts, Lowell, explains the need for continued research and warns against assuming the compounds are safe “by default”.  James K. Hammitt, professor of economics and decision sciences at the Harvard Center for Risk Analysis, prescribes a cost-benefit analysis of further research.  Hal Zenick of the EPA, warns of a “nocebo effect” in which people, once informed of possible exposure to the contaminants, may develop “real, adverse physiological reactions…even if there is no evidence it may be harmfull.”  Finally, Christopher Daughton, an EPA scientist and one of the first to draw attention to this issue, argues that the benefits far outweigh the costs of further research to determine the answers of the unknowns.  More importantly, he adds that doing such research is a “useful way of maintaining public confidence in the water supply.”

So SarbOx and PPCPs – what is the connection, if any and so what?

On the one hand, we have a report centering on the cost-benefit analysis of regaining investor trust in the accounting standards and practices of public companies and the accuracy and transparency of their financial reports.  On the other hand, we have an article exposing the occurrence of “emerging contaminants” thanks in large part to the advent and use of new detecting technologies.  Apparently, the scientific experts surrounding this latter issue are repurposing the disclosure to a cost-benefit analysis of regaining the public trust in the nation’s water. 

It is simultaneously perplexing and amazing that we have reached an age where ‘experts’ are informing the public that the public trust in corporations and in their water are determined solely by a cost-benefit analysis.  If the costs outweigh the benefits, too bad for the environment, too bad for our wallets, and too bad for our basic need of unpolluted water.  Never mind the trust in public corporations – not everyone has the financial resources to invest in the market.  But do take care in issues surrounding water – basic human need to sustain oh, I don’t know – our LIFE!  Oh, and not to mention the fact that our planet Earth is about 80 percent covered with WATER.

By no stretch am I an active environmentalist.  I do try to conserve water, recycle paper and plastic, and not be wasteful to the best of my abilities.  But PPCPs in our nation’s waterways, come on now!  What is most apalling out of everything in Dean’s article is the overall tone of passivity and calm at the overwhelming evidence of contamination.    This whole situation is nothing short of shocking, and I can not even come close to fathoming how on earth anyone – never mind expert – can ask, “Does It Matter?”! 

With SarbOx, the Act was Congress’ and President Bush’s attempted answer to the controversy surrounding corporate scandal and transparency in accounting.  How can we even think of transparency and accountability of financial reporting when our own water is anything but transparent and our own Environmental Protection Agency (operative word being Protection) is bordering on shirking its accountability to its public – trying to justify this stance through a cost-benefit analysis?

If this is our present reality, I opt for virtuality. 

Think about it.

In virtuality, there is freedom to gather, to assemble, and to disclose information.  In virtuality, the individual has full agency to opt for anonymity.  One can establish an e-business, buy and sell e-real estate in domains, and more importantly, one can find solutions, means, and methods to effect real change.  Through electronic technology, as Howard Rheingold details in Smart Mobs: The Next Social Revolution, a million Filipinos toppled President Estrada through public demonstrations organized through text messages and street demonstrators protesting the WTO used dynamically updated websites, cell-phones, and 'swarming' tactics in the 'battle of Seattle'.  Aside from electronic civil disobedience, electronic technologies are mediating qualitative achievements in knowledge processes, providing hope for educators and students alike. As cognitive tools - Context 32, Context 34, CSILE, CSCW, CMCE, ANN – are the new forums for proto-knowledge immediately accessible on the web and created by students. Indeed, students are transforming from readers and explorers to writers and linkers through these computer supported collaborative intentional learning environments.

So what is the connection between electronic civil disobedience and computer mediated learning? Empowered agency. And this empowerment comes at the individual level so that his ability and potential to effect very real change is an actuality, with empirically proven cases worldwide.

Once again, given the option between our current reality and virtuality, I opt for virtuality in the hopes of remediating my present so my next step in future can be forward rather than backward.