While Congress and accountants continue to fight the Sarbanes-Oxley 404 requirements for small filers on what seems like an annual basis, those in the private sector continue to deploy SOX-related policies and procedures as best practices. This trend will continue as the cost of compliance becomes more efficient.
For example, the American Institute of CPAs’ issuance of Statements of Auditing Standards No.’s 104 to 111 currently requires the use of risk-based audit methodology by auditors. As a result, private companies are seeing more controls-based questions and requirements from their auditors.
In the wake of Enron and assorted other accounting scandals, President Bush signed into law Sarbanes-Oxley Act of 2002, the most dramatic change to federal securities laws since the 1930s. Specifically, Section 404 of SOX requires that management document, test and adequately support the effectiveness of its internal controls. It also states that such documentation, testing and support be audited and reported on by its external auditors.
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