Executive Briefings

Sarbanes Makes Overseas Business Even Riskier for You

Overseas markets seem to grow by the minute, luring ever smaller and younger U.S. companies with the promise of booming economies and lower costs. But for these relatively inexperienced firms, the dream of international expansion soon collides with reality: many companies find themselves unprepared to deal with the challenges of running foreign operations.
At the same time, the Sarbanes-Oxley Act has fueled regulators' enthusiasm for rooting out wrongdoing both at home and abroad, leaving CFOs personally liable for operations that may be thousands of miles away. "I've been doing business internationally since the start of my career, but what's changed recently, what really magnifies the risk, is Sarbanes-Oxley," says Jeff Babka, finance chief at NeuStar, a telecom services firm that has built its international operations mostly through acquisition.
"Between the rapid pace of globalization and the new focus on corruption and fraud, CFOs are facing a perfect storm today that they did not face 10 years ago," says Frank Piantidosi, CEO of Deloitte Financial Advisory Services. Adds Don Devost, CFO of iWatt, a small semiconductor manufacturer with subsidiaries in Hong Kong and Japan: "The biggest difficulty is understanding the regulatory environment wherever you're doing business, and the risk that noncompliance poses, not just locally but also here in the U.S."
Source: CFO, http://cfo.com

Overseas markets seem to grow by the minute, luring ever smaller and younger U.S. companies with the promise of booming economies and lower costs. But for these relatively inexperienced firms, the dream of international expansion soon collides with reality: many companies find themselves unprepared to deal with the challenges of running foreign operations.
At the same time, the Sarbanes-Oxley Act has fueled regulators' enthusiasm for rooting out wrongdoing both at home and abroad, leaving CFOs personally liable for operations that may be thousands of miles away. "I've been doing business internationally since the start of my career, but what's changed recently, what really magnifies the risk, is Sarbanes-Oxley," says Jeff Babka, finance chief at NeuStar, a telecom services firm that has built its international operations mostly through acquisition.
"Between the rapid pace of globalization and the new focus on corruption and fraud, CFOs are facing a perfect storm today that they did not face 10 years ago," says Frank Piantidosi, CEO of Deloitte Financial Advisory Services. Adds Don Devost, CFO of iWatt, a small semiconductor manufacturer with subsidiaries in Hong Kong and Japan: "The biggest difficulty is understanding the regulatory environment wherever you're doing business, and the risk that noncompliance poses, not just locally but also here in the U.S."
Source: CFO, http://cfo.com