Question

CPA Interview Question

Get his or her take on the below concepts.

Is complying with SOX an onerous or burdensome exercise? If so, what provisions are the most taxing (pun not intended) on the accountant?

Answer 1

In 2002 the Sarbanes-Oxley Act was introduced with a motive to provide assurance about the completeness and accuracy of financial statements. It's intent of the regulation was to restore investors’ confidence and prevent the collapse of equities in the markets. However complying with SOX was a burdensome exercise. When first introduced, SOX experienced a burdensome and huge exercise for public companies of all sizes. The organisations had little knowledge of it and usually had to spend high amount of money and manpower to get it implemented. The most burdensome element was Section 404 that states the responsibility of management to maintain a sound internal-control structure for financial reporting and to assess the effectiveness. Moreover it's the responsibility of the auditor to attest to the soundness of management’s report and assessment on the state of the overall financial control system