How does the Sarbanes-Oxley Act influence publicly traded companies' need for systems reliability assurance and how is it different from traditional assurance services? Are there any similarities between the two? If so, what are they?
b) How has the Sarbanes-Oxley Act influenced the accounting profession's need to shift from a detection and correction model to a before-the-fact prevention strategy? Do you believe that such a before-the-fact prevention strategy is necessary? Why? Why not? If you do believe that the shift to such a strategy is necessary - why is the old strategy considered inadequate?© BrainMass Inc. brainmass.com June 3, 2020, 7:05 pm ad1c9bdddf
Q. How does the Sarbanes-Oxley Act influence publicly traded companies' need for systems reliability assurance and how is it different from traditional assurance services? Are there any similarities between the two? If so, what are they?
The Sarbanes-Oxley Act has specific provisions to assure systems reliability
Section 401(a): Disclosures In Periodic Reports; Disclosures Required
Each financial report that is required to be prepared in accordance with GAAP shall "reflect all material correcting adjustments . . . that have been identified by a registered accounting firm . . . ."
"Each annual and quarterly financial report, shall disclose all material off-balance sheet transactions" and "other relationships" with "unconsolidated entities" that may have a material current or future effect on the financial condition of the issuer.
The SEC shall issue rules providing that pro forma financial information must be presented so as not to "contain an untrue statement" or omit to state a material fact necessary in order to make the pro forma financial information not misleading.
To insure system against the unethical practices of Accounting firms following provisions are made:
Section 201: Services Outside The Scope Of Practice Of Auditors; Prohibited Activities.
It shall be "unlawful" for a registered public accounting firm to provide any non-audit service to an issuer contemporaneously with the audit, including: (1) bookkeeping or other services related to the accounting records or financial statements of the audit client; (2) financial information systems design and implementation; (3) appraisal or valuation services, fairness opinions, or contribution-in-kind reports; (4) actuarial services; (5) internal audit outsourcing services; (6) management functions or human resources; (7) broker or dealer, investment adviser, or investment banking services; (8) legal services and expert services unrelated to the audit; (9) any other service that the Board determines, by regulation, is impermissible. The ...
In a 1223 word solution, the subject is fully explored and referenced to sections of the Sarbanes-Oxley Act.