Sarbanes Oxley Act : Quality Of Public Company Audit

2378 Words Oct 31st, 2016 10 Pages
SArbanes Oxley Act has improved the quality of public company audit
Neil Vita Sarbanes-Oxley Act has improved the quality of public company audit. SOX prohibited services to try and make auditing more independent. SOX added the role of the audit committee. SOX created the PCAOB. SOX instituted Sec 404 which gave management the responsibility of having to evaluate internal controls. SOX prohibited services to try and make auditing more independent. Prior to the Sarbanes-Oxley Act one, of the biggest questions was whether the accounting firms should be allowed to provide nonaudit services to their audit clients. Members of Congress were convinced that the SEC were forced to back off from giving strict limitations because of the intense lobbying of the accounting firms. The consulting departments had been called by many as a conflict of interest. SOX bans the large scale, big fee financial information system design and implementation or information technology work. However, the SEC never intended to ban all nonaudit services. Many have been around since before audits became required in 1933 by congress. Many of them are closely related to the audit like statutory audits or reporting on internal controls. Another reason to keep some of the nonaudit services is because over time it would diminish the accounting firms overall technical expertise and cause the audits to become less effective. The companies are allowed to retain their auditor to perform non-audit services…
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