"
he Act brings a lot of change to companies in terms of management’s
reporting responsibilities and the complexity of auditor’s
responsibilities. It can be very costly for companies to properly
comply with the Act. Publicly listed firms are forced to deal with
direct and indirect costs which include higher D&O insurance
premiums, greater director’s fees because of increased time
commitment and responsibility, and larger expenses resulting from
internal control software and greater costs due to consulting fees.
One of the major complaints seems to be the lack of detailed
recordkeeping requirements. Because the penalties for
noncompliance are so punitive, companies spent enormous amounts
of money and time and other resources developing SOX compliance
manuals, processes for documenting financial activities and other
data control activities. And still the corporations are not sure if they
are sufficiently meeting the requirements. Independent audits of
financial statements provide a deterrent to opportunistic
management behavior but this was ruined when auditors did not
remain fully independent."
Reference:
Tackett, J., Wolf, F. and Claypool, G. (2004), "Sarbanes‐Oxley and
audit failure: A critical examination",
Managerial Auditing Journal
,
Vol. 19 No. 3, pp. 340-350.
https://doi.org/10.1108/02686900410524355
