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It appears that the current constraints, especially in terms of business operation, and particularly as these manifest within the medium and small business sector, are somewhat excessive. Although the argument relating to a company's choice regarding the cost/benefit ratio is noted, surely a single piece of legislation cannot be universally applied with fairness.
In conclusion therefore, the need for legislation regarding auditing practices within public companies is vital. The extent and nature of the current legislation however can benefit from considerable revision. Indeed, the scale of costs to medium and small companies should be mitigated by providing institutions and tools that target auditing processes within these companies. Furthermore, the legislation should be revised in such a manner that it does not detract from healthy business practices such as competition,...
Enacting legislation that cuts profits as severely as the Sarbanes-Oxley Act does require a reconsideration of its benefits in terms of not only ethical business practice, but also in terms of the economy of the country as a whole. Surely better business practice can be encouraged in a more cost-effective way.
References
D'Aquila, J.M. (2009). Tallying the Cost of the Sarbanes-Oxley Act. The CPA Journal. Retrieved from http://pcaobus.org/Pages/default.aspx
Nusbaum, Edward (2003). The hidden benefits of Sarbanes-Oxley. The Chief Executive, May 2003. Retrieved from http://findarticles.com/p/articles/mi_m4070/is_2003_May/ai_101516993/
PCAOB (2010). Retrieved from http://pcaobus.org/Pages/default.aspx
Sarbanes-Oxley Act (SOA) was put into law in 2002 following the revelations that Enron (and Enron's accountancy Arthur Anderson), WorldCom, and other corporations were using blatantly corrupt practices in accounting and causing huge losses for stakeholders in those firms. Moreover, the U.S. Congress could not simply stand by and allow companies to use unethical and illegal practices to scam huge sums of money for corporate executives while stripping the IRAs
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