US chief audit executives (CAEs) have said
they are against repealing the Sarbanes–Oxley Act (Sarbox) as the
legislation ensures management focuses on financial and
governance-related controls.
A Grant Thornton US survey of 300 CAEs found
that 88% were against Sarbox repeal despite the high costs of
compliance and additional strain the legislation places on
them.
“Overwhelmingly, CAEs believe that
entity-level controls, monitoring controls and the tone at the top
have all improved over the nine years since Sarbox became
effective. For the respondents who believe that Sarbox should be
repealed, the cost of compliance was their main reason,” the study
said.
The survey showed 48% of CAEs believe that
additional changes to regulation and rules poses the greatest
threat to companies as Sarbox companies have already had to
dedicate significant resources to comply with a new laws and
regulations.
The study also observed changes in the
behavior of CAEs who have, according to the firm’s business
advisory service national managing principal Paul Kanneman, moved
from a largely reactive role to an increasingly proactive one.
“As attention once again moves beyond
compliance, CAEs believe that the audit committee, board of
directors and executive management want to rely more on internal
audit to be their eyes and ears on the ground,” Kanneman said.
The study found that 95% of CAEs believe they
provide value to the audit committee, in particular through
risk-monitoring activities and efforts that strengthen corporate
governance oversight.
Nine out of ten respondents said they are
comfortable raising issues with the audit committee that are
inconsistent with management’s views or positions.
Grant Thornton’s study also showed that
internal audit departments are expected to grow and 23% of CAEs
said their departments will be strengthened in the coming year.
