Impact of Sarbanes–Oxley Act. Your long-time client, Central Office Supply, has beenrapidly expanding, and the board of directors is considering taking the company public.CEO Terry Puckett has heard that costs of operating a public company have increased significantly as a result of the Sarbanes–Oxley Act. Puckett is particularly concerned withreports that audit fees have doubled because of internal control provisions of the act andPCAOB Auditing Standard No. 2201. Puckett has asked you to explain the possible effectson the audit of complying with the requirements of Sarbanes–Oxley.Required:Draft a letter to Puckett outlining the changes in the company’s responsibilities for internal control and changes in the audit due to Sarbanes–Oxley and PCAOB Auditing Standard No. 2201

Question

Impact of Sarbanes–Oxley Act. Your long-time client, Central Office Supply, has been
rapidly expanding, and the board of directors is considering taking the company public.
CEO Terry Puckett has heard that costs of operating a public company have increased significantly as a result of the Sarbanes–Oxley Act. Puckett is particularly concerned with
reports that audit fees have doubled because of internal control provisions of the act and
PCAOB Auditing Standard No. 2201. Puckett has asked you to explain the possible effects
on the audit of complying with the requirements of Sarbanes–Oxley.
Required:
Draft a letter to Puckett outlining the changes in the company’s responsibilities for internal control and changes in the audit due to Sarbanes–Oxley and PCAOB Auditing Standard No. 2201

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