What a governance referee thinks.

Robert Roath, CPA and former CFO of RJR Nabisco, is an independent board member and chairman of audit committees for two distinctly different businesses. Interdigital Communication Corp. is a high-tech Nasdaq telecommunications company with $1 billion in market capitalization, and Standard Parking is a Nasdaq service-based company with about $165 million in market capitalization. The former designs and provides advanced wireless technologies; the latter is a cash business providing management for facilities in hundreds of U.S. cities.

Roath says the rules for obtaining CPA services are evolving as companies implement Sarbanes-Oxley. "It's causing some confusion," he says, "but it will get easier as the rules settle down and there is experience to build upon." Under the new regulations the committees Roath sits on have shifted some CPA services away from their traditional accounting firm. "Our staff have excellent public backgrounds, but it's very difficult to stay current on all aspects of accounting and reporting" he says. One firm helps sort out the nuances of accounting rules and regulations and general compliance, and another helps with IT compliance reviews.

To augment the internal staff, the Interdigital audit committee chose Grant Thornton to assist in the review and documentation of internal accounting controls. The committee asked the firm to bid based on its general reputation and prior working relationships. All the independent directors sat on the committee.

Standard Parking is newly public, having completed a successful IPO last May. The company has a strong control orientation and has embraced the new rules for compliance. "Quite possibly they will be able to do this without additional outside resources. It's a myth that a small company cannot deal with these laws," says Roath, referring to the idea that Sarbanes-Oxley will inhibit small private companies from going public. "Standard was on top of the controls situation and has had no problem."

As an audit committee director, Roath says what he looks for in terms of services is pretty simple: "We all know what has to be done in general. The challenge is in the detail. We're willing to listen to proposals about areas where we need help. Firms seeking business should make sure they ask what services the entity wants or needs." Roath notes that one important area of potential opportunity development for CPA firms is board and audit committee member training and education.

The best thing about Sarbanes-Oxley, he says, is that it's "requiring companies to do the things they should have been doing all along." But the way the changes are being implemented by auditors is overly burdensome, which may stem from the newness and uncertainty as well as auditors' concerns about potential litigation. "My concern is that regulators will decide that if some is good, more is better" he says, "and that lawyers will see this as a growth opportunity and launch a new wave of lawsuits."

Another concern, of course, is the cost of complying with Sarbanes-Oxley. "I'm hoping regulators will develop a reasonable approach and companies will increase productivity," he says. "I'm not all that optimistic." Still, he notes that Sarbanes-Oxley for the most part reiterates rules that have always been part of the process. "I like to focus on key performance indicators and free cash flow over time. Less is more and works every time--it lets you see the forest instead of the trees."

MICHAEL HAYES is a senior editor on the Journal of Accountancy.