Some employees might feel a little grumpy or dopey if they whistle while they work.

Potential whistleblowers might think twice before reporting suspected corporate malfeasance in the face of a recent study that indicates promised protection isn’t what it’s cracked up to be. After reviewing 491 whistleblower complaints filed with the Department of Labor between 2002 and 2005, Richard E. Moberly, an assistant professor of law at the University of Nebraska College of Law, found that only 3.6% of the 361 cases that were decided by the Department of Labor proved they were unfairly published after revealing potentially damaging information about their employers, and only 6.5% of the 93 who appealed to DOL judges emerged victorious. “It’s not working the way people expected it would,” says Moberly, who contends the Occupational Safety and Health Administration (charged by the DOL with resolving the disputes) advocates a “narrow reading” of the law.

Attorney Jason Zuckerman, a lawyer with The Employment Law Group that represents SOX whistleblowers, would agree. Zuckerman argues that while Section 806 of SOX states that an employee need only have a “reasonable belief” of misconduct, department officials are demanding a “smoking gun,“ meaning unequivocal evidence. For example, in one of the more nuanced provisions of the law, says Moberly, an employee reporting insufficient internal controls might have to prove that the deficiency they are reporting will ultimately hurt share value. Public interest groups such as the Government Accountability Project (GAP), say this undercuts the intention of SOX and raises the burden of proof. Also, GAP argues, a 90-day statute of limitations unfairly keeps complaints at a minimum.

But even Moberly concedes that the numbers don’t tell the whole story. Not included in the previously undisclosed data that Moberly obtained through a Freedom of Information Act request, are 99 cases that were settled for undisclosed amounts. And attorney Michael Delikat, head of the employment law practice group at Orrick, Herrington & Sutcliffe, takes it one step further: The cases that make it to OSHA are “just the tip of the iceberg.” Many more, he says, are resolved in pre-filings. Moreover, Delikat contends that a number of employees who identify themselves as whistleblowers are simply disgruntled or fired workers determined to make trouble for a company, and still others raise complaints that fall outside the jurisdiction of the statute, and have nothing to do with alleged fraud or other actions that could hurt shareholders.

Still, says GAP executive director Louis Clark, the low number of decisions siding with employees is an indication that something’s not right. “We’re not saying it should be 100% or 50%,” says Clark, “but only one in 25 doesn’t cut it.”

On audit fees, there is no real relief—yet.

Audit costs almost doubled between 2001, the year before Sarbanes-Oxley took effect, through the end of 2006, primarily because of a median 345% jump in audit fees, according to an in-depth analysis of public companies’ financial data by The Corporate Library. The huge jump in fees, in fact, overshadowed a big drop in consultancy costs, which occurred because projects commissioned before SOX are no longer part of the outside auditor’s responsibilities. As a result of this changing paradigm, the proportion of fees as a percentage of total audit costs, or how much auditors were paid vs. general expenses, rose from 40% to almost 95% of the total bill, according to the study: The Audit Landscape: 2001-2007.”

“We have witnessed a major shift from ‘other costs’ to audit and audit-related fees,” notes John Hodgson, senior research fellow at The Corporate Library. According to the independent governance research organization’s report, median auditor costs per company actually climbed to $2.74 million in 2006 from $1.42 million five years earlier. Total audit fees paid in 2006 were $10.5 billion, with $6.4 billion paid in 2001.

Stiff audit fees have held up even as general SOX compliance costs have declined, an anomaly that industry experts attributed to the unrelenting complexity of the rules and continuing insecurity by accountants and corporations about all the law’s provisions. Expect costs and fees to come down in 2008, says Hodgson. “New guidance this year, including Auditing Standard 5 and clarifications by the Securities and Exchange Commission, will make accounting far less complex,” he says. And far less expensive.

People on the Move

Sears Holding Corp. named J. Miles Reidy executive vice president and CFO of the $53 billion retailer, based in Hoffman Estates, Ill. Reidy, 45, replaces William C. Crowley, acting CFO and chief administrative officer. Reidy joins Sears from Capital One Financial Corp., where he assumed senior financial and planning roles, most recently as financial cost executive. Before Capital One, he held numerous financial and strategy positions with Chevy Chase Bank, FSB, First Commerce and Mellon Bank.

Owens Corning, the $6.4 billion leader in building materials systems and composite solutions, based in Toledo, named Duncan Palmer CFO. Palmer, 41, replaces Mike Thaman, who has been promoted to CEO. Before joining Owens Corning, Palmer spent 20 years with Royal Dutch Shell PLC, most recently serving as vice president of upstream commercial finance for Shell International Explorationa and Production BV. He has also served as vice president of finance for the Shell Lubricants business internationally.

Ann Taylor Stores Inc. appointed Michael J. Nicholson executive vice president and CFO of the $2.3 billion women’s specialty retailer, with headquarters in New York. Nicholson, 41, succeeds James M. Smith, who resigned to pursue other interests. Throughout his career, Nicholson has held various senior finance positions with Colgate-Palmolive Co. and Altria Group Inc. He has spent the last seven years with Limited Brands Inc., most recently serving as executive vice president, chief operating officer and CFO of Victoria’s Secret Beauty Co.

Affiliated Computer Services Inc., the $5.8 billion provider of business process outsourcing and information technology solutions, based in Dallas, promoted executive vice president of finance and accounting Kevin Kyser to the position of CFO. Kyser, 40, succeeds John Rexford, who will continue with the company in the in the new position of executive vice president, focused on corporate development initiatives. Kyser joined ACS in 1997 and has served as corporate controller, CFO of the commercial solutions group and, most recently, executive vice president of finance and accounting.

The Hanover Insurance Group Inc. has announced the resignation of executive vice president and CFO John J. Leahy, one month after he took the job, attributing his departure to personal reasons. Leahy joined Hanover after the resignation of Edward Parry III, who left Aug. 31. Prior to joining Hanover, Leahy served in various key business and strategy capacities for PepsiCo Inc. and Keane Inc. The company has begun a search for Leahy’s replacement, and, for the interim, has named Fredrick H. Eppinger, the company’s CEO, acting CFO.

Anixter International Inc. promoted senior vice president of finance and CFO Dennis Letham to executive vice president of finance and CFO of the $4.9 billion distributor of communication products, electrical and electronic wire and cable, based in Glenview, Ill. Letham, 56, has spent the past 12 of his 14 years at Anixter as senior vice president of finance and CFO. In the last year, he has taken on additional duties, mainly in the human resources area, which helped accelerate his promotion.

Are you sure there aren’t a few dozen pay-per-view movies and lots of room service in that hotel bill?

Containing travel and expenses (T&E) costs is a top priority for most finance departments. That’s not surprising considering that U.S. businesses spent $171 billion on air, car, hotel and meals for domestic travel in 2006, according to PhoCusWright Inc., a travel research firm based in Sherman, Conn. Now, American Express Co. says its new Room Rate Analysis Report promises savings through increasing transparency by breaking out specific charges for individual products and services from the overall hotel bill. As a result, finance teams know exactly how much money is being spent in each of various categories, such as the daily room rate; room tax; food and beverages (and whether they come from restaurant or room service); parking, and such business services as faxes, Internet connectivity and photocopies. The precise data can be used to ensure, for example, that daily room rates match previously negotiated prices and fall within allowable employee expenses. The parsed information can also be used to negotiate new corporate rates, based on proven buying power or implement new policies to cut down on expensive and unnecessary costs. Corporations can also use the information to assess average, minimum, maximum and “most popular” ratings on hotels and cities.

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Open Text goes for simple on invoice processing.

Open Text Corp., a provider of enterprise content management (ECM) software and solutions, has released a new version of its vendor invoice management (VIM) product, Livelink-ECM, which it says accelerates return-on-investment by streamlining accounts payable processes. According to Open Text, the latest version of Livelink, used in conjunction with SAP ERP systems, includes enhanced vendor self-service portal capabilities; enhancements to VIM analytics to increase performance and offer more reporting flexibility; new document processing workflows and new diagnostic tools to speed up configuration and deployment. Open Text claims that this Livelink goes beyond traditional applications with extensive pre-configured invoice processing scenarios and customer-driven enhancements. “These new features in VIM reduce the cost and time needed for customers to optimize their procure-to-pay processes, while giving them deeper insight into the performance of their supply chain,” says Patrick Barnert, vice president for SAP applications at Open Text.

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