Question

Is SOX working? Is Section 404 of Sarbanes-Oxley accomplishing what it was intended? Why or why not? Has it been worth the cost?

Answer 1

To restore the confidence of Investors, Government in the financial statement United states congress passed the Sarbanes-Oxley Act. It was brought into action after ENRON, LEHMAN BROTHER Scam took place that shook the world economy. After SOX the number of Large scale scam has reduced significantly therefore it can be said that it is working.

Section 404 has the requirement for management's yearly comfirmation that internal controls over financial reporting are effective. And also the internal auditor is required to form an opinion on the effectiveness of the internal control. It also focus on the documentation by the management about the control in place and the assesment process invovled.

PCAOB is responsible for publishing the guidance for auditor while examining the management's assertion on internal control. There has many modification made to section 404 from time to time to make it more suitable. Section 404 is serving what it is made for.