The staff of the office of the chief accountant of the Securities and Exchange Commission published its study on April 22, as required under the Dodd-Frank Act, examining Section 404(b) of the Sarbanes-Oxley Act, which requires public companies’ auditors to report on, and attest to, management’s assessment of its internal controls.
The 118-page release concluded that the costs of Section 404(b) declined since they were first implemented, that investors generally consider auditors’ attestation on assessments of internal controls to be beneficial, that financial reporting is more reliable when an auditor is involved in such assessments, and finally, that there is inconclusive evidence about whether Section 404(b) requirements are connected to issuers’ listing decisions.
