I was acting chief accountant at the Securities and Exchange Commission in May 2003 when the Commission’s first set of rules implementing the provisions of Section 404 of the Sarbanes-Oxley Act—the section that requires management and auditor reporting on internal controls—were passed. No other part of SOX has generated nearly as much controversy, anger, frustration, or backlash. On the other hand, no part of SOX has as much potential to contribute to investor confidence and high-quality financial reporting over the long term as Section 404.
