Question

Recently, the U.S. federal government and the American Institute of Certified Public Accountants (AICPA) have taken aggressive steps aimed at ensuring the quality of organizational governance. What are these changes, how might they change organizational governance procedures, and do you believe that these actions will really improve internal control of business organizations?

Answer 1

First, the U.S. Congress passed the Sarbanes-Oxley Act of 2002 (SOX). This groundbreaking legislation is intended to set the foundation for improved organizational governance. Most notably, SOX disullows auditors of public companies from performing most consulting services with their audit clients; establishes a Public Company Accounting Oversight Board (PCAOB) to watch over the auditing profession; requires CEOS and CFOs ten sign quarterly and annual financial statements submitted to the SEC (by signing, the CEOs and CEOs are certifying that the financial statements are correct in all material respects); and, requires CEOS, CFOS, and independent auditors to sign an internal control report that details the presence and effectiveness of the company's internal controls.

The AICPA has developed a special portal on its Web site devoted to SOX implementation activities, enhanced its ethics enforcement process, and voiced its strong intention to further strengthen the independence of public auditors and integrity of all CPAS.