Who's afraid of a little more documents?
By Daniel M. Ryan
There has been some recent grousing about the Sarbanes-Oxley Act, from people who lack a sense of the new possibilities made possible by that wonderful act. It hails an exciting world of universal documented transactions, made possible through the latest technology, where every single transaction has a record attached to it. Just think of the possibilities!
An accountant should understand. Although the world of accounting is a somewhat rarefied one, it is essential to the modern corporate world, and will soon be essential for the entire business world. There's no need anymore for the proverbial shoebox full of receipts dumped on the desk.
Just think of the sunny side. Every single transaction, no matter how small, will be in a database available for inspection. Anyone who wishes to provide helpful advice to any entrepreneur will be able to do so with new facts at his or her disposal. Given that mindshare is good, the rationalization possibilities should be quite evident. Just take some time to think about how open sourcing of business books would add to the economy.
Of course, there are complaints about straitjacketing business, as well as those complaints about the spending. Most of them, I can say confidently, come from entrepreneurs who are at heart ungovernable. This is obviously to their cost; how else would it be possible to see deviancies from trends that a company must respond to in order to seek profits and expand markets?
Once again, an accountant should understand. The more data, the better, as an increase not only adds to the level of detail in a report, it also adds to the number of potential reports that can be generated. Is it not true that the more you know, and the more analyses you have, the better equipped you are to act? Such an advance makes it possible to identify more niches for any company to trade off.
As businesses become more interlaced with more complete data reports about everything, a clearer and more accurate picture of the economy will emerge. This implies the potential for social good, as well. Too many government policies have gone awry because of inadequate information and hurried estimates. This lacking can, of course, be charged to a lack in technology. Once the transaction data becomes more complete and more accurate in terms of classification, a clearer and more comprehensive view of the economy as it is will be available to society through the government. This will enable social and economic policy to "get real," in a way that it has never been able to before. The best facet of it is that everyone can participate in the helping of businesses…through the government! (All it takes is a call or letter to your representative.)
Modern management systems clearly bring gains and avoid losses, as is evident when a company started by an impulsive entrepreneur has to be rescued from near-bankruptcy by a team of professional managers. The universalization of management systems, even to the level of the lone operator seeking profits, will undoubtedly spread these gains far and wide. There will be no need for the shoebox stuffed by a small businessperson hurriedly seeking or implementing an opportunity. The relevance of these new possibilities easily reveals itself to the understanding.
Yes, the Sarbanes-Oxley Act, to the extent to which it goes as of now, is truly a wonderful prelude to a new world of business rationality. The market response to it, and the introduction of current management and financial systems (including financial monitorings through IT) to groups who were long suspicious of them, have the potential to do for management theory what the labour unions have done for Adam Smith's division of labour!