Page 82 - SBL Integrated Workbook STUDENT 2018

Chapter 8

2.2 Key effects of SOX

 personal liability of directors for mismanagement and criminal
punishment

 improved communication of material issues to shareholders

 improved investor and public confidence in corporate US

 improved internal control and external audit of companies

 greater arm's length relationships between companies and audit
firms

 improved governance through audit committees.

2.3 Negative reactions to SOX

 doubling of audit fee costs to organisations

 onerous documentation and internal control costs

 reduced flexibility and responsiveness of companies

 reduced risk taking and competitiveness of organisations

 limited impact on the ability to stop corporate abuse

 legislation defines a legal minimum standard and little more

Illustrations and further practice

Now try TYU question 1.

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