SOX Center

When the U.S. Securities and Exchange Commission moved last week to relax a provision of the Sarbanes-Oxley Act, it signalled the end to what could be called the Great Audit War.

Ever since U.S. lawmakers passed the corporate reforms in 2002, legal and financial executives have been waging a behind-the-scenes war with external auditors over the staggering costs and management burden stemming from what surely has been the largest corporate list-making exercise in history.

The culprit is a four paragraph passage in the now infamous Section 404 of Sarbanes-Oxley which requires thousands of U.S. and about 200 Canadian companies listed on American stock exchanges to “review and assess” the controls they have in place to detect financial reporting errors or fraud. The kicker is a requirement that outside auditors test and deliver an annual opinion about the effectiveness of the corporate safeguards.

With no guidance from the SEC about how to arrive at the annual opinion, the accounting police went, well, berserk demanding exhaustive tests and reports so auditors wouldn’t be liable if financial shenanigans were exposed.

globeinvestor: Bid adieu to the Great Audit War

Few Give Stock Options a Second Look ATLANTA–(BUSINESS WIRE)–Oversight Systems Inc. today released the results of the 2007 Oversight Systems Financial ExecutiveReport on Sarbanes-Oxley. The survey of 168 financial executives identifies growing benefits of continuous monitoring, improved management of year-three compliance costs and a positive jump in shareholder value.

The 4th annual survey found financial executives were bullish on the use of continuous monitoring in Sarbanes-Oxley (SOX) compliance, have begun to reign in the costs of year-three compliance, recognized a bump in shareholder value and report a risk-based approach to 2007 compliance.

Nearly two-thirds of financial executives (64 percent) see merits in using continuous monitoring as a detective tool in SOX compliance. Additionally, 58 percent feel it can serve as a preventative tool, 50 percent think it can facilitate management’s assessment of risk and help test the effectiveness of other controls, and 42 percent believe it can be used as a compensating or mitigating control.

Download the complete survey report

Yahoo!Finance: Oversight Systems 4th Annual SOX Survey Finds Financial Executives Hail Prospect of Continuous Monitoring, Bullish on Lower Compliance Costs