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Article: Sarbanes Oxley Act Section 404: effective internal controls or overriding internal controls?
- Article from:
- The Forensic Examiner
- Article date:
- June 22, 2007
- Author:
CopyrightCOPYRIGHT 2007 American College of Forensic Examiners. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Abstract
The principal objectives of the Sarbanes Oxley Act (SOX) are to minimize the possibility of financial statement fraud in publicly traded corporations and to minimize the possibility of external auditors endorsing falsified financial statements. Implementation of the act has gone well with the exception of Section 404, which was intended to create greater accountability of top management. It has, instead, morphed into a detailed, cost-prohibitive, and ineffective bureaucracy. External auditors are focusing on the risk of fraud occurring when the focus should be on determining if override of internal controls has occurred. The spirit of SOX Section 404 ...