Seizing upon Sarbanes-Oxley.

• Author: Barron, Kelly
• Position: Cottage industries - Cover Story

On a Wednesday morning in Los Angeles, Larry Russell, CPA, CITP, is stuck in traffic on the San Diego Freeway. But he's on the move. He's wielding a cell phone, trying to drum up business for AccounTech, his Los Angeles-based consulting firm that integrates accounting with technology systems.

Looking for an inroad to new revenue, Russell is working an angle of the Sarbanes-Oxley Act, the monumental legislation that ushered in a new era of corporate governance and a host of reforms aimed at making auditors more independent.

His strategy: form alliances with accounting firms that by law can no longer provide financial information systems consulting to their publicly held clients and offer specialized technology services for companies that must generate newly mandated internal control audits.

"Show me a CPA firm that doesn't need a tech guy in the back room," says Russell, realizing the opportunities that are out there for the taking in the wake of Sarbanes-Oxley.

NEW COTTAGE INDUSTRY

Russell, a former Ernst & Young network systems analyst and a member of the CalCPA Technology Committee, is not alone in maneuvering for new business. Sarbanes-Oxley--signed into law in July following accounting scandals at Enron, WorldCom and others--already has spawned a cottage industry.

Enter "Sarbanes-Oxley" on Internet search engine Google, for example, and you're bombarded with links from companies offering to set up anonymous employee hotlines--a feature now mandated by the act--and from consultants teasing Sarbanes-Oxley advisory services with "Are you compliant?" tag lines.

"There are a lot of people who are viewing Sarbanes-Oxley as a full employment act," says CalCPA member John Tonsick, managing director of Citigate Global Intelligence & Security in Los Angeles.

Huckstering aside, the reordering of the accounting industry resulting from Sarbanes-Oxley will undoubtedly create opportunities. Carolyn Brancato, director of the Global Corporate Governance Research Board at the Conference Board in New York, likens Sarbanes-Oxley to trust-busting legislation of decades ago that split the oil companies' ownership of railroads and laid new tracks for smaller, entrepreneurial companies vying for business in the aftermath of the breakup.

Sarbanes-Oxley "will definitely open doors," she says.

Just how wide those doors swing open is anyone's guess.

Many in the profession believe niche players now can chase--and land--ancillary consulting services, such as bookkeeping or appraisals, because they are off-limits to firms auditing public companies.

The Sarbanes-Oxley requirement for internal control audits also will boost business for both the Big...