CPA Observation Post

U.S. House passes bill that would expand SOX 404(b) exemptions

The U.S. House approved the JOBS Act Thursday by a vote of 390-23. The JOBS Act contains a number of provisions meant to encourage small business growth and more IPOs. The AICPA and the Center for Audit Quality, which is affiliated with the AICPA, have expressed concerns about relaxing investor protections through expansion of SOX 404(b) exemptions contained in the bill and companion legislation in the Senate. Read More>>

House committee debates SOX exemption for mid-size companies

Members of the House Financial Services Committee on Wednesday debated legislation that would exempt companies with $500 million or less in publicly traded shares from certain audits required by the Sarbanes-Oxley Act. Companies with $75 million or less in such shares were granted an exemption in the 2010 Dodd-Frank Act. Supporters say the wider exemption would save money for mid-size companies, while opponents say the audits at issue are essential to investor confidence. Read More>>

Sarbanes-Oxley got easier as companies adjusted, survey says

Almost 90% of companies surveyed by Protiviti said the recession had no effect on their ability to meet their compliance duties under Sarbanes-Oxley. Almost half the respondents said their internal controls had improved over the past year. More companies are handling their compliance work in-house instead of hiring outside help, the survey found. Read More>>

SEC Report Recommends No New SOX 404(b) Exemptions (from @AICPA_JofA)

The Securities and Exchange Commission's Office of the Chief Accountant examined the impact on certain public companies of Section 404(b) of the Sarbanes-Oxley Act and has recommended maintaining the existing requirements, which relate to the auditor's report on internal control over financial reporting, with no new exemptions. The study found the cost of compliance, including both total costs and audit fees, has declined since reforms were issued in 2007. Read More>>

Audit executives see value in SOX, survey shows

The majority of chief audit executives surveyed by Grant Thornton said the Sarbanes-Oxley Act should be repealed. However, half said that a changing regulatory environment is the greatest threat to their companies. Read More>>

PCAOB Proposes Fees, Inspections for Broker-Dealers

The Public Company Accounting Oversight Board proposed a temporary inspection program for broker-dealers that could require the firms to pay significant fees for costs related to audits. The program is "the first step down the road of turning that new authority into a functioning oversight program," said Daniel L. Goelzer, acting chairman of the PCAOB, which was created under the Sarbanes-Oxley Act. Read More>>

Study: Sarbanes-Oxley 404 audits improve financial reporting (from @WebCPA)

Sarbanes-Oxley 404 audits of companies' internal controls reduce the chances of issuing inaccurate financial statements, and the regulations are meeting their goal of improved reporting, according to a study by an accounting professor at John Carroll University. Companies that didn't comply with Sarbanes-Oxley Section 404, which requires firms to annually assess their internal-control systems, were about 40% more likely to have to reissue their financial reports because of material misstatements than companies that complied, the study says. Read More>>

Audit Fees Still Falling, but Not as Dramatically

A three-year slide in audit fees may be beginning to bottom out. Fees have been dropping for several years now, first as Sarbanes-Oxley work became more routine and then as companies scrutinized expenses in response to the economic crisis. But a recent CFO analysis of audit and audit-related fees paid last year suggests that the trend has begun to slow. Read More>>

Reports from Corporate 'Whistleblowers' on Increase

The PCAOB received 179 reports reporting possible problems by audit firms, corporate accounting staff or others in 2009. The number of such reports has been increasing steadily over recent years.  Read More>>

PCAOB wants firms to improve supervision over accounting processes (from @WebCPA)

The Public Company Accounting Oversight Board plans greater enforcement of a provision in the Sarbanes-Oxley Act that allows the sanction of firms that fail to adequately supervise staff members who break certain rules and standards. The board is also seeking public comment until Oct. 4 on possible rules and standards that would require firms to clarify exactly who within the company is responsible for certain areas of the company's audits. Read More>>