The standard of audit quality has improved in the US since the
implementation of the Sarbanes-Oxley Act (SOX), according to audit
committee members who took part in a recent Centre for Audit
Quality US (CAQ) study.
The survey found that despite the recent turmoil in financial
markets, audit committee members have high levels of confidence in
the quality of audited financial statements and consider SOX
implementation as a positive influence.
Approximately 87 percent of respondents said the risk of
inaccuracies in financial statements due to fraud is not very high
and 60 percent believed the risk had declined since SOX was first
implemented. About 53 percent agreed that overall audit quality is
very good while 25 percent described it as excellent.
Ninety-nine percent of audit committee members surveyed said they
devote more time to their committee work as a result of
requirements under SOX. While nine out of ten said they now work
more closely with external auditors.
The views of the audit committee members echo the results of a CAQ
poll of investors in July 2007, which found that 80 percent of
investors had confidence in audited financial information.
CAQ executive director Cindy Fornelli commented: “The findings
confirm that public company audit quality is high and has only
gotten better in recent years, according to the people closest to
CAQ governing board member Michele Hooper added: “The CAQ’s
research tells us that Sarbanes-Oxley is working for investors, for
audit committee members and for our capital markets. We should
always strive to do better when it comes to safeguarding the
integrity of the markets, but it’s good to know that we’re making