BackChannelReport: 404 Tracking/Trends

Karl Nagel | Sarbanes-Oxley

Almost four years after the passage of Sarbanes-Oxley, a number of factors have become evident that hold significance for corporate compliance and reporting professionals:

1. Audit firms are operating in riskier environments - clients must fulfill a wide range of accounting, financial and systems requirements in order to satisfy various audit rules and regulations. CPA firms desire clean audits; they have better insight than external analysts and have been busily resigning from engagements and discarding clients that do not fulfill their internal risk/reward evaluations.

2. Audit service fees have grown significantly over the last four years - the result has been a movement away from traditional Big 4 firms towards both mid-size regional and local audit firms. Who are these firms and what types of resources and capabilities do they possess? What internal calculus have companies performed that leads them to conclude that changing firms may better satisfy their compliance requirements and potentially help reduce overall audit fees?

3. Corporate compliance and reporting professionals are charged with important legal and regulatory disclosure responsibilities. What types of historical and other trend information is available covering SEC enforcement/compliance actions directed at either audit firms and/or firm clients? What are the most frequent reasons cited by management teams and auditors for non-effective internal controls?