Commentary on the SEC’s Proposed Exemption to Internal Control Audits under SOX 404(b)

8 Pages Posted: 10 Mar 2020

See all articles by Mary E. Barth

Mary E. Barth

Stanford University - Graduate School of Business

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School

Joseph H. Schroeder

Indiana University - Kelley School of Business - Department of Accounting

Daniel J. Taylor

The Wharton School, University of Pennsylvania

Date Written: July 11, 2019

Abstract

We comment on the Securities and Exchange Commission’s (the “Commission”) proposed Amendments to the Accelerated Filer and Large Accelerated Filer Definitions. We provide comments and analysis relating primarily to the Request for Comments in Sections II.E and III.D of the proposed Amendments (“Proposal”). Our comments relate to the provisions of the Proposal that would eliminate internal control audits required under Section 404(b) of the Sarbanes-Oxley Act for companies with annual revenue less than $100 million. Part I provides comment on the central premise of the Proposal. Part II provides comments on various aspects of the Commission’s economic analysis. Although it might be socially desirable to encourage investment, and research and development, we believe there are ways to do so without sacrificing oversight.

Suggested Citation

Barth, Mary E. and Landsman, Wayne R. and Schroeder, Joseph H. and Taylor, Daniel, Commentary on the SEC’s Proposed Exemption to Internal Control Audits under SOX 404(b) (July 11, 2019). Available at SSRN: https://ssrn.com/abstract=3535931 or http://dx.doi.org/10.2139/ssrn.3535931

Mary E. Barth

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-9040 (Phone)
650-725-0468 (Fax)

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-3221 (Phone)
919-962-4727 (Fax)

Joseph H. Schroeder

Indiana University - Kelley School of Business - Department of Accounting ( email )

1309 E. 10th Street
Bloomington, IN 47405
United States

Daniel Taylor (Contact Author)

The Wharton School, University of Pennsylvania ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

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