Question

Research Sarbanes-Oxley. How has it changed the responsibility of people involved in companies whose stock is publicly traded? Can accounting firms still audit and accept consulting fees? How about directors and company officers—are their duties different now?

Answer 1

• Can accounting firms still audit and accept consulting fees:

Accounting firms can go for auditing and accept consulting fees. After the Sarbanes Oxley act there has been a list of nine services of non-audit which has been prohibited by auditors to public companies. When the audit firms lose their income from these services, they must obviously charge a high audit fees to recover their cost of auditing with fees for consulting and other services which are provided by the auditors.

Because of SOX, the workload of the firm also has increased thereby increasing the cost of audit to the firms.

• Duties of directors and company officers after SOX:

The director has the duty of oversight and also the officer has the role of oversight where it delegates responsibilities to lower level people and also monitor them on their performances. The principal duty is that they have to remain informed on what is happening within the corporation. They also have the duty to ask them questions to the subordinates on whom responsibility has been delegated by the managers.

The Sarbanes act also represents the obligations of this act which is responsible for ensuring that the complaints about the audit tasks performed are taken to the officers so that findings in the report may be accurate.

The SOX provides duties which are in contrast to the one that has been stated in congressional testimony. Hence this law contains more laws and formulations which places more demands from the officials.

• Responsibilities of people in public traded stock companies:

The primary responsibility was to increase transparency in its inside activities.

The responsibility of senior managers has been increased for better quality on its financial statements.

It is necessary for them to be responsible to the SEC.

Have supervisory powers on publicly traded companies.