the energy conglomerate enron was the

seventh largest company in the united

states and then poof it collapsed

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finance ultimately is about trust

enron's management

had frankly cooked the books concealed

problems in the business defrauded

investors and more its failure wiped out

more than two billion dollars in

retirement savings tens of thousands of

jobs this scandal was followed by yet

other multi-billion dollar accounting

frauds at worldcom and elsewhere and so

in response to this crisis 20 years ago

this july

congress enacted the sarbanes-oxley act

i was honored to have a front-row seat

working with my hometown senator paul

sarbanes on this bill

an essential goal of sarbanes-oxley was

again

to restore that trust in our financial

system

so first it enhanced the quality

of auditing standards inspections and

enforcement auditing standards for

instance were set by a professional

association and the profession was

writing its own roles

that's an inherent conflict

thus

sarbanes-oxley established an

independently funded auditing standard

center the public company accounting

oversight board under the regulatory

oversight of the securities and exchange

commission

it also ensured that the accounting

standards themselves

the setter the financial accounting

standards board had secure independent

funding you see it matters who audits

the auditors

second at enron

their auditing firm had lucrative

consulting engagements with the energy

company

so that's an inherent conflict as well

thus senator sarbanes working with

congressman mike oxley on the other side

worked to create a stronger barrier

between auditors and other parts of

the auditing firm's businesses

and then lastly

the enron crisis revealed problems with

how companies are governed so

sarbanes-oxley established requirements

to help ensure that the incentives of

executives their boards their

auditors their accountants their audit

committees are better aligned with their

investors for the protection

of you so

happy birthday sarbanes-oxley in the

last 20 years we've learned a lot the

quality of public company audits has

improved

let's not forget our core lessons though

it's important to have robust

independent organizations setting the

standards inspecting the firms and

forcing against those rules

it's important to separate the parts of

an auditing firm from its consulting

services that may have conflicts with

each other and it's important that

companies

are held accountable

for their numbers when trust in our

markets grows that benefits investors

and issuers alike