Congress knew what it must do, so
Sarbanes- Oxley took the cue.
To shore up corporate responsibility
They made a law to test internal control sufficiency.
According to many this legislation misses its stated purpose. Opposing views describe the Public Company Accounting Oversight Board (PCAOB) as either the "savior of financial reporting and terminator of corporate fraud" or conversely, the "guardian of government interference and the annihilator of the accounting profession." (Raiborn and Schorg, 3)
SOX is undeniably unpopular with many suggesting that the negative effects impact both the audit processes and also corporate codes of conduct and even whether companies will continue to list in the United States. This paper looks at just some of the unintended consequences and confusion arising from this legislative attempt to redress investor confidence.
This knee jerk' and unopposed legislation has had a negative impact on existing safeguards and structures. There are many examples of unintended consequences of which the following are just a few.
Fewer auditing companies: It is suggested that the number of firms that desire to audit public companies will diminish resulting in greater concentration within the accounting industry. The reason is that Title I requires public accounting firms to register with the PCAOB. There is already evidence of a decline in numbers; a trend that is expected to continue, not least because of the difficulties in withdrawing once registered (Raiborn and Schorg, 3)
Bureaucracy: Perhaps the most obvious consequence is the increase in bureaucracy. Arthur... [continues]
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