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Sarbanes-Oxley Act Of 2002 Summary

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1. Analysis of independence in the Sarbanes–Oxley Act of 2002 The Sarbanes–Oxley Act of 2002, also known as Public Company Accounting Reform and Investor Protection Act, is a federal law which was enacted in 2002. important reason resulting in the enactment of the Sarbanes- Oxley Act of 2002. The las set new or expanded requirements for all U.S. public company boards. Enron scandal is the most management and public accounting firms, such as the requirements for external auditors. In Title II—Auditor Independence, Section 201 (g), (h), and Section 202 (i) set up rules for public accounting firms. And Section 208 (b) concludes them. Section 201 Services outside the scope of practice of auditors states the following: “(g) PROHIBITED ACTIVITIES.—Except …show more content…

Independence and objectivity are most fundamental guarantee for auditors to perform services with no bias and preferences, especially for internal auditors. Internal auditors may know the information and situations of their company, which makes them more difficult to perform auditing actions. Therefore, keeping independent and objective helps auditors audit the company and report the real information and financial position to management and audit committee. This also helps the company grow healthily, and managers could adopt related and effective measurements to problems in the company. Any elements which can impair independence or objectivity should be focused on and avoided if possible, also the auditors should report the impairment to audit …show more content…

How internal auditors maintain objectivity and independence in the reports? I think there are three ways can help internal auditors be independent and objective. First, management’s help. Internal auditors shall communicate and report to management frequently. Auditors would get directions and support from CEO. More transparent between auditors and managers, more objective and independent. Second, the oversight’s help. Oversight always reminds auditors to be ethical. It helps auditors without bias and judgements. Also, the oversight might avoid internal auditors’ conflict of interest. Last and more important, the communication with audit committee. Internal auditors should report to audit committee periodically, which helps auditors get support, effective strategy, and directions. Audit committee can enhance the organizational status of internal auditing, and ensure the auditors’ independence and objectivity. 5. Why is it important for Internal Auditors to be independent? Internal auditing is an activity adopted by an organization, such as company, institute, and government, to help themselves. It is an approach to add the value and improve the operations, also internal auditing can help to better assist management in the improvement of internal controls, mitigate the management of risk, and govern the organization. Internal auditing must have independence, objectivity, integrity and

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