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The SOX 404 internal control audit: Key regulatory events

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  • Li, Chan
  • Raman, K.K.
  • Sun, Lili
  • Wu, Da

Abstract

Section 404b of the 2002 Sarbanes–Oxley Act (SOX) requires auditors to attest to the effectiveness of a client's internal control over financial reporting (ICFR). In this paper, we provide an overview of key regulatory events in the implementation of the 404 internal control audit. We discuss the early years (under Auditing Standard No. 2) as well as the later years (under Auditing Standard No. 5) of the 404 audit, emphasizing areas of improvement in the efficiency and effectiveness of the audit as well as the remaining problems and challenges highlighted in PCAOB inspection reports and practice alerts. Finally, we address recent regulatory developments pertinent to the 404 audit such as Auditing Standard No. 12 and the recent 2013 update to the Committee of Sponsoring Organizations of the Treadway Commission's (COSO) internal control framework.

Suggested Citation

  • Li, Chan & Raman, K.K. & Sun, Lili & Wu, Da, 2015. "The SOX 404 internal control audit: Key regulatory events," Research in Accounting Regulation, Elsevier, vol. 27(2), pages 160-164.
    • Handle: RePEc:eee:reacre:v:27:y:2015:i:2:p:160-164
    DOI: 10.1016/j.racreg.2015.09.006
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    References listed on IDEAS

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    1. Martin, Kasey & Sanders, Elaine & Scalan, Genevieve, 2014. "The potential impact of COSO internal control integrated framework revision on internal audit structured SOX work programs," Research in Accounting Regulation, Elsevier, vol. 26(1), pages 110-117.
    2. Rajib Doogar & Padmakumar Sivadasan & Ira Solomon, 2010. "The Regulation of Public Company Auditing: Evidence from the Transition to AS5," Journal of Accounting Research, Wiley Blackwell, vol. 48(4), pages 795-814, September.
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    Cited by:

    1. Du Jianguo & Rauf Ibrahim & Peter Lartey Yao & Rupa Jaladi Santosh & Amponsah Clinton Kwabena, 2019. "The Effectiveness of Internal Controls in Rural Community Banks: Evidence from Ghana," Business Management and Strategy, Macrothink Institute, vol. 10(1), pages 202-218, December.
    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. Legoria, Joseph & Rosa, Gina & Soileau, Jared S., 2017. "Audit quality across non-audit service fee benchmarks: Evidence from material weakness opinions," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 97-108.
    4. Lawson, Bradley P. & Muriel, Leah & Sanders, Paula R., 2017. "A survey on firms' implementation of COSO's 2013 Internal Control–Integrated Framework," Research in Accounting Regulation, Elsevier, vol. 29(1), pages 30-43.

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    Keywords

    SOX 404 audit; internal control; AS2; AS5; PCAOB;
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