SOX: Unintended Dilemmas for Auditing

Abstract

The Sarbanes-Oxley Act of 2002 brought wide spread changes to financial reporting. Companies now must report on internal control deficiencies. There are criminal penalties for false certification of financial reports. The new Public Company Accounting Oversight Board was established. And audit committees have enhanced responsibilities.

Considered in isolation, these reforms appear to improve the quality of financial information and increase public confidence. But when considered as a whole-in the context of practical application-some unanticipated effects are causing audit dilemmas. And they may damage the quality of financial information.