Solomon & Peecher (2204a)

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Databases selected: Multiple databases. .. Full Text (736 words) SOX 404 -- A Billion Here, a Billion There. .. Ira Solomon and Mark E. Peecher . Wall Street Journal . (Eastern edition). New York, N.Y.: Nov 9, 2004. pg. B.2 Abstract (Summary) Ironically, most SOX 404 work misses both targets. Billions are being spent documenting controls that lie below, and can be stealthily overridden by, C-suite members. Further, according to the Public Company Accounting Oversight Board (the audit profession's new regulator), SOX 404 controls ordinarily do not include controls over public companies' business operations. Absent further changes, the billions being spent on SOX 404 promise little more than a false sense of security. Three interrelated initiatives,however, could change this prospect: First, redirect more of the billions being spent on SOX 404 activities to evaluating controls over persons in the C-suite. Second, expand the construct -- internal controls over financial reporting -- so that significant business process controls ordinarily are included. Third, invest in enriching auditors' systems thinking skills so that they can assess changing risks in public companies' complex, dynamic systems of business-process and financial-reporting controls. While not easy to implement, all stakeholders in our financial reporting system should demand nothing less. Copyright (c) 2004, Dow Jones & Company Inc. Reproduced with permission of copyright owner. Further reproduction or distribution is prohibited without permission. PUBLIC COMPANIES and their auditing firms are busily working to meet the Nov. 15 compliance deadline for Section 404 of the Sarbanes-Oxley Act, or SOX 404 as it's commonly called. But something is being overlooked amid the millions of billable hours: There's not a shred of evidence that the stringent new rules will help protect the investing public. Together, the Big Four auditing firms have spent approximately 12 million hours on activities related to SOX 404,
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