In October 2004, Moody’s Investors Service opened a Pandora’s Box with the issuance of a special comment paper titled “Section 404 Reports on Internal Control: Impact on Ratings Will Depend on Nature of Material Weaknesses Reported.”
With the start of the first Sarbanes-Oxley reporting season just around the corner and more than 500 public confessions of material control weaknesses already filed by SEC registrants, the technical flaws of the external auditing profession are slowly, but steadily, being exposed to harsh public scrutiny.
