Sarbanes-Oxley Act 2002 was one such measure intended to set standards to guarantee the accuracy of financial reports published by organizations irrespective of big or small. This paper briefly explains the impacts of Sarbanes-Oxley Act 2002 on accounting profession.
Section 404 of the Sarbanes-Oxley Act 2002 (SOX) mandates creation of an internal control structure, and assessment of its effectiveness. This control structure involves controls on internal financing reporting and auditing (Bergen, 2005). Many companies have reported that the introduction of SOX and the increased internal control structure was more expensive than anticipated. The external costs have been increased a lot for many companies because of SOX and this increase especially at in a period of recession was too difficult for the companies to handle. At the same time, most of the costs needed to strengthen the internal control were one-time expenses only and the corporate and the investor public would be beneficial from that in the long run.
Section 409 of SOX mandates that a company must disclose to the public any information that is of material value that affects the organizations financial condition or operations. This section was a real challenge for the accounting professionals since most of the companies used Excel spreadsheets for keeping much of their financial data and linking these data in a timely manner with the financial reporting systems were too much difficult. The non compatibility of ordinary Excel spreadsheets with the other financial reporting systems forced the companies to change their accounting software to the much advanced and expensive software like SAP and Oracle or to incorporate new technologies such as off the shelf applications and spreadsheet templates with macros to convert data into a format that can be readily integrated into the organization’s financial reporting system (Jyoti, 2005).
Earlier some of