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MARSHALL, Mich., May 1, 2003.—After analyzing a representative sampling (and then some) of 2002 annual reports to shareholders, annual report observer (and former corporate officer) Sid Cato said he perceived "precious little" impact of new government regulations aimed at insuring full and honest disclosure.
The Sarbanes-Oxley Act, mandating that the CEO join the chief financial officer in accepting responsibility for integrity of the financials, "isn't resulting in wholesale improvement in annuals," he observed. If, as the Securities and Exchange Commission says, 12,114 U.S. companies are required to produce an annual report, "statisticians say I need analyze only 110," square root of the universe. To date, Cato said he has reviewed, "in depth," 118 from around the world. He said fewer than half (44.9%) of corporate CEOs appear concerned with accepting responsibility for the financials. Typical, he said: "Public utility KeySpan had no signatures whatsoever on its management's assumption." Others that Cato said "haven't bothered to adhere to the government requirement" range from Ohio's A. Schulman, Inc., to Connecticut-based Zygo Corp. Cato's criteria (copyrighted in 1984) encompass extensive financial disclosure, to total honesty by a company's chief executive officer, to a book that says "open me, read me—that is, possessing various readability enhancements, beginning with a cover that aggressively solicits readership." Cato began his newsletter in September 1983, 237 issues ago. |