|Background and Problem: A consequence of the many accounting scandals was that congress
passed the Sarbanes-Oxley Act in July 2002. This in order to restore public confidence in the
stock market and increase confidence in the integrity of the entire system of public ownership
and accountability in the U.S. The legislation establishes new and enhanced standards for all
U.S. public company boards and management, and for the accounting profession. One of the
Sections in the Act (Section 404) is Management assessment of internal controls. I found it of
great interest to investigate what consequences American companies have identified after
implementation of Section 404 of the Sarbanes-Oxley Act.
Purpose: With this research, my purpose is to explain and analyze the consequences Section 404
of the Sarbanes-Oxley Act has had on American companies. By looking at earlier research on the
subject and questioning people who have a great deal of experience and knowledge in the
relevant area, this is to be accomplished.
Delimitations: My focus is mainly on section 404 of the Sarbanes-Oxley Act- Management
Assessment of Internal Controls. In addition, the legislation only affects companies that you can
find on American exchanges and their subsidiaries, so this thesis will focus on a few of these
companies in the U.S.
Methodology: This thesis is based on scientific books and articles as well as survey’s that was
send to people who have a lot of knowledge and experience on the subject. This thesis follows a
hermeneutic approach and is both descriptive and explanatory. In addition, the qualitative
method is most appropriate for this thesis.
Analysis and Conclusion: Section 404 of the Sarbanes-Oxley Act has caused both positive and
negative consequences. The costs of implementing Section 404 became so much higher than
were initially predicted and various other problems have also been identified. But most
important, nearly all people think that SOX has succeeded to reach its goal; to restore investor
confidence and transparency in financial reporting.
Suggestions for further research: My focus in this thesis has been from an American
company’s perspective. Thus, it would be very interesting to investigate how auditors, on the
other hand, have been affected by the implementation of Section 404 of the Sarbanes-Oxley Act.
|Externredovisning och företagsanalys
|the Sarbanes-Oxley Act. What consequences have American companies identified after implementation of Section 404 of the Sarbanes-Oxley Act?
|Göteborg University/Department of Business Administration
|Göteborgs universitet/Företagsekonomiska institutionen