Question

What are three ways the implementation of the Sarbanes-Oxley Act directly impacted the work of auditors?

Answer 1

Solution. Sarbanes-Oxley Act was enacted in 2002 to protect stakeholders from increasing business errors and fraudulent activities by increasing transparency and accountability in reporting.

Three ways the implementation of the Sarbanes-Oxley Act directly impacted the work of auditors are given below:

1. It requires auditors to recognize management's internal control process while auditing and non delegation of responsibilities, lead audit partner rotation every five years and limits non-audit related services.

2. It requires certification of various financial reportings by the management and auditors opinion on internal control's effectiveness.

3. Set up of audit committees with established relationship with external auditors to enforce and strengthen auditor independence and audit quality.