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unrelated to audit services and other services the PCAOB determines by rule to be impermissible' (McDermott, 2010). Furthermore, the lead audit partner and second or reviewing partner must be rotated every five years on public company engagements. An accounting firm will not be able to provide audit services to a public company if one of that

company's top officials (CEO, Controller, CFO, Chief Accounting Officer, etc.) was employed by the firm and worked on the company's audit during the previous year.

Sarbanes-Oxley closes two legal and ethical loopholes that have been used in the past to defraud investors. It requires financial statements to be free not only of falsehoods, but also of misleading omissions. Financial statements must also report off-balance sheet information if it is relevant to the company's financial status. Company officers are required to sign these reports, preventing them from relieving themselves of responsibility for inaccuracies and fraud by pointing to the accounting department or pleading ignorance. Issuers of financial statements must report on the internal controls designed to encourage accurate financial reporting. If there is an adverse financial change, companies are now required to report these changes soon after they occur. Under the Sarbanes Oxley Act, stiff prison sentences are now mandated for 'anyone who destroys, hides, or alters documents or objects for the purpose of obstructing justice, including intentionally misfiling documents so that they are difficult to find.

Debate continues over the perceived benefits and costs of SOX. Supporters contend the legislation was necessary and has played a useful role in restoring public confidence in the nation's capital markets by, among other things, strengthening corporate accounting controls. Opponents of the bill claim it has reduced America's international competitive edge against foreign financial service providers, saying SOX has introduced an overly complex regulatory environment into U.S. financial markets. Another concern is whether the cost of complying with regulations has driven businesses in general - and small firms in particular - to leave the public capital market and 'go private.' 'According to a RAND Corporation report, the propensity for small public companies to be purchased by private firms, which are not subject to Sarbanes-

Oxley, increased by 53 percent during the first year. The estimate was calculated relative to similar foreign companies, which are also not subject to Sarbanes-Oxley' (Karaca-Mandic, & Kamar, 2006).

Many small business owners are concerned about the section of the Sarbanes Oxley Act which requires publicly-traded companies to hire third-party auditors. The cost of complying with SOX 404 impacts smaller companies disproportionately, as there is a significant fixed cost involved in completing the assessment. 'During 2004 U.S. companies with revenues exceeding $5 billion spent 0.06% of revenue on SOX compliance, while companies with less than $100 million in revenue spent 2.55%' (SEC.gov). Those businesses argue the law should exempt some smaller businesses, who they say can't afford the costs to comply. Randall Griffin, President of Corporate Offices Property Trust in Columbia, Maryland says, 'Small publicly traded businesses deserve the [special] treatment because it takes time and resources, even additional employees, to fill in required paperw本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。