Resources for Sarbanes-Oxley (SOX)

Corporate governance: Crack down

www.accountancyage.com

There is a severe danger that internal auditors, those most innocuous of souls, are about to be caught in a pincer movement in the painful heart of a nutcracker. And what is most galling of all is that it is not their fault. Finance directors need to leap to their defence.

So why are internal auditors in a painful place not of their making and certainly not of their choosing? As ever, it is because the rest of the world has changed, arguably for the worse, around them.

The first issue was Sarbanes-Oxley. Internal auditors probably welcomed it initially. After all, the most notorious part of it, Section 404, was, frankly, current practice in any well-organised company. The bases should be covered and directors sign off on them. Standard practice. Or rather it was standard practice. What happened was that the audit business in the US, aided and abetted by US regulators, suddenly saw this as an opportunity to show a sceptical public that they were as pro-active and rigorous as need be. So the whole business was hyped beyond recognition. Service layer after service layer was introduced. Supervisory staff turned up in their millions. They wanted to be seen as the cavalry arriving to save both companies and the US audit profession’s reputation. And also, of course, to turn more than a few bucks at a time when fees could have started to slide.

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