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Essay on Sarbanes Oxley
The world of financial auditing has changed significantly during the past decade and will continue to change quickly as increasingly more companies rely on information technology to achieve their business objectives. Indeed, the passage of the Sarbanes–Oxley Act of 2002 (Public Law 107-204) will have a major influence on the internal and external auditor. Moreover the IT auditor will play an essential role in ensuring observance with this act. It is no longer acceptable for auditors to audit around the computer, as was once the case. With the increase in fraud and constant corporate scandals over the past two years, it is now even more essential than ever before that auditors have a full knowledge of both manual and automated internal control processes.
The assessment of both the manual and automated internal controls of any system can provide the desired assurance auditors can use to base their professional judgment on as far as the quality of the information derived from the system. This view is an important element in the risk analysis process that the auditor must perform during the planning stages of any audit. External financial auditors are relying more on the process approach today.
The latest accounting scandals, such as Enron, WorldCom, Adelphia, and Global Crossing to name a few, investors have raised the questions of credibility of external auditors failure to detect financial statements fraud. Independence of auditor was recognized as a biggest cause of the recent audit failures. Long-established approach of self-regulation (AICPA enforcing generally accepted auditing standards (GAAS) and the Code of Professional Conduct) was considered failed to correctly ensure the quality audit provided in such audit failures. Independence has long been the foundation of audit process, and any erosion of it may produce potential dangers to audit quality and reduce the chances that the auditor may detect false financial reporting...........
