Restatements by SOX 404 Issuers

Small companies claim that an auditor’s participation in a Sarbanes-Oxley 404 review is too costly. However, many believe that the costs are more than outweighed by the benefits investors and the stock market obtain. Financial restatement rates after a company claimed to have effective internal controls were 46% higher for companies that filed management-only reports as compared to those that filed auditor attestations. When an auditor is involved in the assessment, disclosures are provided to the public more promptly.

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