Just when public companies thought they could breathe a little easier because section 404 requirements are being relaxed and their audit spend should decrease accordingly, the Public Company Accounting Oversight Board has released a new report.
According to CFO.com, the report chastises audit firms for spending too little time on "fraud detection" and then recommends specific steps that should be taken to correct the problem. Among them: digging deeper into financial statements and paying more attention to management overrides of established internal controls.
The questions posed by the columnist are these: Will the new "forensic audits" cost more and does that mean the savings realized from a simpler Sarbox 404 will immediately disappear into the audit fees fund?
Unfortunately, probably so. However, if the whole point of revamping Sarbanes-Oxley is reducing the cost of compliance and making more companies comfortable with listing in U.S. markets, what good does it do to replace one set of costly regs with another?