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How has the Sarbanes-Oxley Act of 2002 changed the need for the internal audit function?

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How has the Sarbanes-Oxley Act of 2002 changed the need for the internal audit function?

The Sarbanes-Oxley Act of 2002 also called the Public Company Accounting Reform and Investor Protection Act was brought about because of the corporate and accounting scandals during the 1990's (The free dictionary by Farlex). In the 1990's the corporate and accounting companies worked together in order to increase revenues and profit for these large corporate companies without regards to laws, rules or regulations. This lack of responsibilities brought on bankruptcies, severe stock losses and a loss of confidence in the stock market (The free dictionary by Farlex). The act established new responsibilities on public corporate management and criminal fines on those corporate managers that do not obey the law.

The act allows for the Securities and Exchange Commission (SEC) to establish authority over any director or officer who has violated laws that involve issuing of stock, new disclosure ...

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The Sarbanes-Oxley Act of 2002 changed is examined.

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Internal Auditor Staff: Importance of Function and Costs

In a latest seminar on internal audit wherein a group of corporate representatives of corporations (privately and publicly held corporations), several issues were raised by the attendees, a number of which are listed below:

1. Establishing an internal audit function/department is not a legal requirement. Consequently, it is an optional function.

2. In an era of economic difficulties, we need to cut back on overhead such as internal audit functions. Internal audit department does not bring any revenue to the corporation. It is a mere cost center. A company should not establish the function unless it will increase the earnings of the company.

3. If we (corporations) have a legal requirement to have an internal audit function, then staffing it with one person will suffice the requirement.

4. Internal audit function is to compare policy to actual transactions; consequently the internal auditor does not have to be collage graduate.

5. To minimize our cost, we may perform one audit a year, and outsource it to a job shopper.

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