Reforms reduced compliance costs.

Author:Steffee, S.
Position:Sarbanes-Oxley Act of 2002 - United States. Securities and Exchange Commission - Brief article
 
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COSTS ASSOCIATED WITH U.S. Sarbanes-Oxley Act of 2002 Section 404 compliance tend to decrease steadily after the first year of implementation, according to an SEC study. The general conclusion of the study by the SEC's Office of Economic Analysis is that SEC and U.S. Public Company Accounting Oversight Board (PCAOB) reforms issued in 2007, such as Auditing Standard No. 5 (AS5), have enabled U.S.-listed companies to lower their compliance costs.

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Section 404 compliance costs vary by company size, notes the study, which is based on a survey of 3,000 financial executives. Large companies pay more in terms of total amount, but costs are greater for smaller firms relative to their market capitalization.

The SEC's findings signal that, after several delays, small listed companies may soon have to comply with Section 404(b). Small firms already file management reports on internal control over financial reporting under Sarbanes-Oxley Section 404(a), but have not yet had to file an external auditor's attestation report of management's...

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