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Do management reports on internal control over financial reporting improve financial reporting?

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  • Dowdell, Thomas D.
  • Herda, David N.
  • Notbohm, Matthew A.

Abstract

Sections 404a and 404b of the Sarbanes–Oxley Act require management and external auditors, respectively, to report on the adequacy of a company’s internal control over financial reporting (ICFR). Larger public firms were first required to file a management report and have an external audit of ICFR in 2004. Smaller public firms were first required to file a management report on ICFR in 2007 but are exempt from the attestation requirement. We investigate the distinct effect of management reports on financial reporting quality. We find that management reports on ICFR improve reporting quality and demonstrate that there are financial reporting benefits from the management report requirement on its own without attestation.

Suggested Citation

  • Dowdell, Thomas D. & Herda, David N. & Notbohm, Matthew A., 2014. "Do management reports on internal control over financial reporting improve financial reporting?," Research in Accounting Regulation, Elsevier, vol. 26(1), pages 104-109.
    • Handle: RePEc:eee:reacre:v:26:y:2014:i:1:p:104-109
    DOI: 10.1016/j.racreg.2014.02.011
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    References listed on IDEAS

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    Cited by:

    1. Herda, David N. & Notbohm, Matthew A. & Dowdell, Thomas D., 2014. "The effect of external audits of internal control over financial reporting on financial reporting for clients of Big 4, Second-tier, and small audit firms," Research in Accounting Regulation, Elsevier, vol. 26(1), pages 98-103.
    2. Brown, Kareen E. & Elayan, Fayez A. & Li, Jingyu & Mohammad, Emad & Pacharn, Parunchana & Liu, Zhefeng Frank, 2016. "To exempt or not to exempt non-accelerated filers from compliance with the auditor attestation requirement of Section 404(b) of the Sarbanes–Oxley Act," Research in Accounting Regulation, Elsevier, vol. 28(2), pages 86-95.
    3. narjess BOUABDALLAH & jamel Eddine HENCHIRI, 2020. "L' impact des mécanismes de gouvernance interne sur le risque opérationnel bancaire," Journal of Academic Finance, RED research unit, university of Gabes, Tunisia, vol. 11(1), pages 151-189, June.
    4. Chalmers, Keryn & Hay, David & Khlif, Hichem, 2019. "Internal control in accounting research: A review," Journal of Accounting Literature, Elsevier, vol. 42(C), pages 80-103.

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