The Sarbanes-Oxley Act of 2002 is not being implemented as its authors intended -- and it's the Public Company Accounting Oversight Board's fault. Or at least that's what former Congressman Michael Oxley, R-Ohio, thinks.
According to an accountingWEB story out today, the Sarbox co-author says the problems most companies have with Sarbanes-Oxley section 404 began when the PCAOB issued Auditing Standard 2. What started as a two-paragraph standard, he says, ended as 320 pages of too-prescriptive regulations that cost more to implement than anyone imagined they would.
Oxley isn't the only one unhappy with the PCAOB, of course. The Free Enterprise Fund has filed a federal lawsuit against the board, alleging that it is unconstitutional. So far the group's efforts have been unsuccessful, but an appeal is in the works.
Don't be too quick to judge, however. Both the Securities Exchange Commission and the PCAOB agree that change is due, if their actions are any indication. The PCAOB recently made its new auditing standard -- AS 5 -- available for public comment; the SEC has approved new delisting requirements for foreign companies listed on U.S. exchanges and proposed a new and simplified risk-based approach to Sarbanes-Oxley implementation.
Moreover, the agencies have met several times to develop a common approach to such risk-based implementation -- such that the audit processes are less redundant and compliance is more easily attainable in terms of implementation costs.