Besides the costs, what are opponents’ biggest gripes with Section 404 of the Sarbanes-Oxley Act? It seems like the cost is the core issue with compliancy but there are insurmountable benefits. Do the benefits not warrant the initial investment (cost)?
Sarbanes-Oxley Act Section 404
This section is listed under Title IV of the act (Enhanced Financial Disclosures), and pertains to ‘Management Assessment of Internal Controls’.
Summary of Section 404
Issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.
The registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.
Just ask the vast number of individuals that were robbed of their retirement savings after the bankruptcy filings of Enron and Worldcom in which Arthur Andersen issued each an unqualified audit opinion if the costs out weigh the benefits.
My profession has come under scrutiny because of the wrongdoings of many in the profession. This type of reform is much needed to restore the public’s confidence in the accounting profession.
November 7th, 2009 at 6:19 pm
It is a huge waste of money for most companies.
It has not caught anyone doig anything wrong, so I doubt it will even stop the next enron.
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November 7th, 2009 at 6:27 pm
If the company is on the up and up, it’s not necessary. But, it does catch the crooks.
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November 7th, 2009 at 7:09 pm
The sarbanes-oxley act just makes sure that companies are doing things legally. If you are doing things correctly, there is no ‘initial investment’ to be made.
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November 7th, 2009 at 7:26 pm
Sarbanes-Oxley Act Section 404
This section is listed under Title IV of the act (Enhanced Financial Disclosures), and pertains to ‘Management Assessment of Internal Controls’.
Summary of Section 404
Issuers are required to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.
The registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.
Just ask the vast number of individuals that were robbed of their retirement savings after the bankruptcy filings of Enron and Worldcom in which Arthur Andersen issued each an unqualified audit opinion if the costs out weigh the benefits.
My profession has come under scrutiny because of the wrongdoings of many in the profession. This type of reform is much needed to restore the public’s confidence in the accounting profession.
References :