Essay: Requirements of Sarbanes Oxley Act
The high audit fee is also another cost that the small and big companies have to bear. The Sarbanes Oxley Act requires extensive and detailed auditing by accountants which has resulted in demand for highly skilled SOX accountants. These professionals tend to charge more for complex and tenuous tasks of auditing the financials and the records of the company.
The large firms have been able to curtail and meet the costs as they have significant resources but the smaller firms in the economy have been finding it difficult to keep up with the expenses without taking the business into bankruptcy. Moreover the auditors still have vested interests and conflicts of interests with companies whom they audit as they are paid by these companies. As a result it is still very easy for the corrupt managements to manipulate their auditors into conducting fraud and hiding the true picture of the companies’ financial performances. “Despite tougher anti-fraud measures, three out of four certified fraud examiners feel fraud is more prevalent today than it was in 2002. They are also reporting increases in increases in incidents of expense and reimbursement schemes, bribery and economic extortion, according to the Oversight Systems annual report on corporate fraud. The report found an eye-popping 56 percent saying they had personally observed financial misconduct in the past year. And there’s every indication it might get worse with close to half indicating that corporate vigilance and executive interest has already started to fade.” (Leon, 2007)General American Life Insurance Co. and KPMG are two companies involved in the fraudulent activities pertaining to hiding their financial activities by keeping them off the records. The Sarbanes Oxley Act was unable to identify and bring a halt to the fraud. (Reisinger, 2003)
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