Sarbanes Oxley Act Wk 2

From the e-Activity, recommend how the SOX framework can ensure reliable and complete financial information and how accounting professionals have benefitted from its use. Provide support for your response.

The top benefit of SOX, according to survey respondents, is “enhanced understanding of control design and control operating effectiveness” (44 percent), followed closely by “internal audit’s ability to perform more traditional audits” (43 percent). Sarbanes-Oxley has had its share of controversy in the past, but its been reported that the internal control over financial reporting structure in most organizations has improved since compliance with Sarbanes-Oxley Section 404 became a requirement. Companies are still learning and working to improve continuously the quality of their internal controls as well as the effectiveness and efficiency of their compliance processes.

The majority of executives are focusing on automation of their companies’ internal controls to realize the full benefit of the landmark legislation. Many companies are still focused on reducing the number of key controls, streamlining the total population of controls, narrowing the overall assessment scope, decreasing the number of manual controls and increasing the number of automated controls.

From a company perspective, I think the two most positive things that came from Sarbanes-Oxley are (1) the required attestation by the CEO and the CFO; and (2) better internal control procedures and documentation. While the CFO’s responsibilities for financial reporting always seemed clear, even that was more implicit than explicit in some companies. And adding the CEO’s sign-off means that he or she will insist on a rigorous process to ensure the highest possible quality of reporting.

With respect to internal controls, even those companies that considered themselves to be very well controlled prior to Sarbanes-Oxley found that documentation often was weak or that some parts of the system needed...