20 Questions Auditors Should Ask About Sarbanes Oxley

CONTROL ISSUES:

PERFORMANCE/GOVERNANCE:
The emergence of the Sarbanes Oxley Act has placed an emphasis towards management's responsibility of ensuring quality financial reporting and integrity of their organization's internal controls. As an external auditor, it is imperative to not only ascertain management's compliance in providing corporate accountability, but also to ensure that it is not used to negate their own responsibility to the public and compromise the performance of their audits. In assessing the governing bodies of the organization, the auditor must keep in mind that management's actions set the tone of the organization's structure, which, in a well-governed organization, is propagated throughout all levels of the organization and determines the effectiveness of the organization's internal controls.

1. In evaluating management's compliance with SOX, how has management embraced the Act's initiative towards greater corporate responsibility from the resulting evidence? What audit implications (if any) could this impose on the company?

Why it's important:
Public confidence in capital markets can only be restored when corporate governance is in line with these interests. Though an audit is a means to establish credibility, an auditor cannot perform a good audit without depending in part upon management. It is important to keep in mind that an auditor's role in financial reporting is secondary, which explains why the SOX Act focus' upon corporate accountability above all else. Corporate governance sets the tone of an organization by determining the degree of data integrity involved. Furthermore, since management is given responsibility over the effectiveness of internal controls, it could be stated that good governance eq ...
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