Is non-compliance the way forward? 155

  • I do understand your concerns and issues. But like any other state or government requirement/regualtion. Its the LAW…
    If you don’t believe me, tell your external account firm that you do not wish to participate in Sarbanes Oxley Compliance. LOL
    Jeff Cunningham

  • Allow me to throw a wrench in the works.
    the Act does not require adherence to the PCAOB AS2. There is NO guidance for management. Therefore all these hoops that external auditors want management to jump through (less than a remote liklihood -c’mon.) are silly. The act is reasonable, the PCAOB is psycho.
    Management under 404 need only do two things:

    1. state that management is responsible for an adequate control structure
    2. assess the effectiveness of the control structure
      No mention of COSO, CobiT light, assertions, etc. Management under the act can come up with any reasonable method for assessing the effectiveness of internal controls. The auditors however are held to the standards of a board because they could not be trusted to manage themselves. How we got to the point where management must comply with PCAOB rules, I don’t know… oh wait, our auditors held the ‘if you don’t do it our way we won’t sign’ gun to our heads.
      What is required by the act is ok… the mess that the PCAOB made of interepreting the act… wow, someone’s trying to justify their position 😉
      Just my ‘unbiased’ opinion.

  • Chris you are right - from a certain point of view. However, your auditor does need to follow AS2 and your auditor needs to attest on whether management’s assertion is valid.
    Your approach may result in 404 compliance BUT you’ll get a qualified audit.

  • Our company just certified by the Big4 firm with an unqualified opinion but it’d been a long and hard road to get this result. Both the external and internal auditors as well as the company accountants put in tremendous efforts and endless hours and we are all exhausted. Bottom line is if you can not stand the heat, get out the stock exchange, SOX is law and there is no room for negotiations. BTW, the audit fee in 2004 trebled due to the SOX work.

  • Thank you all for your insights! Pardon me for being late, but I am doing research on SOX compliance, and this conversation raises some very challenging issues.

    On one hand, SOX compliance is there to protect the shareholders, and having controls in place benefits the bottom line. On the other hand, does non-compliance automatically mean there is wrongdoing, or do prohibitive costs create a necessity for essentially ethical people to find an alternative?

    • Are smaller reporting companies, start-ups, etc., subject to the same sophisticated controls as a company as large as Apple?
    • What are the ramifications of non-compliance? Are there penalties involved, or merely the hold up of audit sign-off until in compliance?
    • Is “going private” a means of avoiding the scrutiny and oversight placed upon public companies, or just a means of avoiding the costs? Our audit fees are already exorbitant, and just the thought of increased cost makes my head pound.

    Your feedback is greatly appreciated!

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