Sarbanes-Oxley Act Essays

664 Words Sep 25th, 2010 3 Pages

Sarbanes- Oxley Act Article Analysis

University of Phoenix

Sarbanes- Oxley Act Article Analysis Internal controls mandated by the Sarbanes – Oxley act have proven to be a difficult hurdle for publicly held companies to comply with. (Barnes & Thornburg, 2004) The internal control requirements of the Sarbanes – Oxley act have laid the responsibility of internal audits, effectiveness and efficiency of internal auditing controls squarely on the shoulders of senior management, audit committees they employ and external auditors. The compliance responsibility includes certification and consent forms to be filed by all involved parties. The Sarbanes – Oxley internal control
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Senior management is more accountable for the accuracy of financial statements due to the Sarbanes – Oxley legislation. Internal audit committees have been saddled with additional responsibilities to be in compliance with the Sarbanes – Oxley act. Audit committees are scrutinized for involvement, interaction, effectiveness, and their overall understanding of their role as a committee. Audit committees also bare the burden for the appointment, compensation, retention and oversight of all work performed by any registered public accounting firm retained to prepare or issue an audit report or perform an audit. (Barnes & Thornburg, 2004, p. 3) The role of an external auditor has also been impacted by the Sarbanes – Oxley legislation as the role now includes the auditing of a company’s financial statements and an audit of a company’s internal control processes. An external auditor also “has the new role of assessing the effectiveness of the audit committee.” (Barnes & Thornburg, 2004, p. 4) The working relationship between senior management, audit committees and external auditors has evolved into a relationship that requires communication with different levels of management. Prior to the Sarbanes – Oxley legislation senior management might not have taken the responsibility to take the time to review company internal control measures. The new requirement is time consuming and expensive however, because the

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