Speculation on how regulators may amend compliance rules for Sarbanes-Oxley has reached a fever pitch recently, as the Securities and Exchange Commission and the Public Company Accounting Oversight Board prepare to release critical guidance for 2007 within weeks.
The new rules should focus on two distinct but related issues: guidance to help corporate executives understand their responsibilities when they assess their internal control over financial reporting, and changes to Auditing Standard No. 2, which external auditors use to conduct their own review of a company’s internal controls. Corporate America has hollered for years that it has too little of the former, leaving businesses with little recourse when auditors use AS2 to enforce draconian crackdowns on internal controls.
