Concept
Should you change auditors because of their strict interpretation of the Sarbanes-Oxley Act?
IntroductionToBusiness OP 8D04gAa / Ethics Activity
"(Information) Ethics Activity As the controller of a medium-sized financial services company, you take pride in the accounting and internal control systems you have developed for the company. You and your staff have kept up with changes in the accounting industry and been diligent in updating the systems to meet new accounting standards. Your outside auditor, which has been reviewing the company’s books for 15 years, routinely complimented you on your thorough procedures. The passage of the Sarbanes-Oxley Act, with its emphasis on testing internal control systems, initiated several changes. You have studied the law and made adjustments to ensure you comply with the regulations, even though it has created additional work. Your auditors, however, have chosen to interpret SOX very aggressively—too much so, in your opinion. The auditors have recommended that you make costly improvements to your systems and also enlarged the scope of the audit process, raising their fees. When you question the partner in charge, he explains that the complexity of the law means that it is open to interpretation and it is better to err on the side of caution than risk noncompliance. You are not pleased with this answer, as you believe that your company is in compliance with SOX, and consider changing auditors. Using a web search tool, locate articles about this topic and then write responses to the following questions. Be sure to support your arguments and cite your sources. Ethical Dilemma: Should you change auditors because your current one is too stringent in applying the Sarbanes-Oxley Act? What other steps could you take to resolve this situation? Sources: Loren Kasuske, “The 4 Biggest Pros and Cons of the Sarbanes-Oxley Act,” https://ktconnections.com, June 8, 2017; Terry Sheridan, “Financial Services Spend More than $1M Annually on SOX,” https://www.accountingweb.com, August 2, 2016; “Sarbanes-Oxley Is Paying Off for Companies Despite Increased Costs and Hours, Protiviti Survey Finds,” http://www.prnewswire.com, June 2, 2016; Daniel Kim, “Top 3 Ways to Reduce SOX Compliance Costs,” https://www.soxhub.com, December 14,"
Related Ideas
- Should you change auditors because they are applying the Sarbanes-Oxley Act too stringently?IntroductionToBusiness OP 8D04gAa · Ethics Activity
- Should you change auditors because they apply the Sarbanes-Oxley Act too stringently?IntroductionToBusiness OP 8D04gAa · Working the Net
- How did regulations change corporate accounting and reporting practices?IntroductionToBusiness OP 8D04gAa · 14.3. Basic Accounting Procedures*
- How did the Sarbanes-Oxley Act reshape accounting and financial reporting?IntroductionToBusiness OP 8D04gAa · 14.2. The Accounting Profession*
- How has the post-SOX environment changed the accounting industry?IntroductionToBusiness OP 8D04gAa · 14.8. Trends in Accounting*
- How do public and private accountants differ, and how has federal legislation affected their work?IntroductionToBusiness OP 8D04gAa · Summary of Learning Outcomes
- How do accountants and regulations support financial information and business decisions?IntroductionToBusiness OP 8D04gAa · Summary of Learning Outcomes
- What additional steps did the accounting profession take to prevent future abuses?IntroductionToBusiness OP 8D04gAa · 14.2. The Accounting Profession*