This is the Kato Daily Podcast for Wednesday, August 20, 2008.

I'm Caleb Brown.

The goal of the 2002 Sarbanes-Oxley Act was to make corporate accounting more transparent.

In practice, the laws requirements have had the opposite effect.

That from T.J. Rogers, president and CEO of Cyprus SIPRA's semiconductor.

Rogers is the author of a new Cato report that argues that recent accounting burdens have rendered

many financial statements inscrutable, often to the very CEOs whose jobs depend on making sense of the numbers.

The FastB, the current Financial Accounting Standards Board, are seven

accountants, professional accountants. Only one of them has been in business, and they, in effect, mandate how American companies report to their shareholders. they are in my opinion a pretty

impractical group that recently has been doing some things that by

recently I mean in the last 10 years doing some things that have been

really harmful to American business.

One of your chief criticisms of these accounting rules deals with the expensing of stock

options. Isn't the right to buy an option?

Doesn't that count as an asset?

Well, you can count it one of two ways.

If you look at when our company or any tech company sells an option to an investor

uh... we call those things convertible to benches they are an option

to get stock in the case the stock goes up to be paid back or to get your money back.

It's a debt which is convertible to stock and the accounting for those when we sell options like those to our investors is we calculate

the interest expense on the debt with no stock issued and then we do a second calculation for getting the interest expense

and calculate the dilution effect of having to issue extra shares.

...