Section 404 of the Sarbanes-Oxley Act
This article review is on the article written by David S. Addington called “Congress Should Repeal or Fix Section 404 of the Sarbanes-Oxley Act to Help Create Jobs.” The Heritage Foundation published the article on September 30 2013. In the article, the author addresses concerns among companies staying in compliance with Section 404 of the Sarbanes-Oxley Act. The author indicates that section 404 of the Sarbanes-Oxley act has caused a financial burden on companies. Companies spend a large amount of money to stay in compliance with the regulations on section 404 of the Sarbanes-Oxley Act. Furthermore, companies could use the money spent on auditing financial records to invest in more business lines and create more jobs (Additon, 2011).
Section 404 of the Sarbanes-Oxley Act requires companies to include a statement of the responsibility of the company management for “establishing and maintaining an adequate internal control structure and procedures for financial reporting” along with their report filed with the Securities and Exchange Commission (SEC). The annual report must include an assessment of the effectiveness of the company’s internal control structure and procedures for financial reporting, followed by having a registered public accounting firm “attest on, and report on the assessment made by the management.” This aspect of the legislation requires companies to document important financial documents along with the review from the certified public accounting firm; it requires tremendous effort and large amounts of money for companies to comply with this aspect of the Sarbanes-Oxley Act (Additon, 2011). The author indicates that companies can use the money spent by companies to stay in compliance on other businesses lines; creating more job opportunities and benefiting the economy. The author demands that Congress should examine whether section 404 is needed, and if so, how
References: David S. Addington "Congress Should Repeal or Fix Section 404 of the Sarbanes-Oxley Act to Help Create Jobs." The Heritage Foundation. September 30, 2011. Web. Retrieved from: http://www.heritage.org/research/reports/2011/09/congress-should-repeal-or-fix-section-404-of-the-sarbanes-oxley-act-to-help-create-jobs 2012 Sarbanes-Oxley Compliance Survey. Retrieved from: http://www.protiviti.com/en-US/Documents/Surveys/2012-SOX-Compliance-Survey-Protiviti.pdf