When Securities and Exchange Commission Chairman Christopher Cox testified before the House Financial Services Committee not long ago, he admitted that the process audits required by section 404 of the Sarbanes-Oxley Act of 2002 are much too costly. (A study from AMR Research says companies will spend more than $6 billion this year on compliance.)
Nonetheless, he assured the committee that there are no "irreparable problems" with Sarbox, according to an International Herald Tribune report. Moreover, the SEC has "ample authority" to correct the problems that do exist without congressional intervention.
The PCAOB's recent submission of proposed changes to its Auditing Standard 2 to the SEC for review may well be the next step toward making the audits less expensive.
Simplifying the standard and clarifying the auditor's role, as well as reinforcing the fact that the audit of internal controls should be conducted as part of the financial statement audit and not separately, should (keep your fingers crossed) make the whole process more efficient.
That, in turn, should mean that auditors and company personnel alike will spend less time on the audits, and time saved is money saved.
And if that doesn't do it -- or at least prove to be a step in the right direction -- former Federal Reserve chairman Greenspan's advice, according to a Boston Herald story, is this: Scrap the whole Act and start over.