Due to the passage of the Sarbanes-Oxley Act of 2002, there were certain limitations that emerge in conducting the auditing process of an auditor to its clients. Like, the auditor can no longer provide their clients with legal and expert services unrelated to the auditing of the auditor as well as the management functions or human resources and other services that the board determines that by regulation is impermissible.
Based from Sarbanes-Oxley Act, any auditor, or any registered public accountant firm, can only perform non-audit services as well as tax services to its audit clients under the consideration of the Sec.
201 [g] of the said act given that the said auditor or registered firm ask permission and approved by the committee of the issuer in accordance with the Sec. 202 [i] of the said act (findlaw.com, 2007). With this, the auditor can no longer easily perform non-auditing services to any audit client without having the consent of the client’s audit committee. Before, it was just a breeze for most of the auditing firms to offer tax services and other non-auditing services, but with the advent of Sarbanes-Oxley Act in 2002, the scope of the services that can be offered by the auditing firm was restricted into something that is more formal and easily monitored by the client’s officials.
Another instance wherein Sarbox limited the services that can be provided by any auditing form or individual is the imposition of the “partner rotation” in conducting the auditing services. It is said in the law that it is unlawful for the auditor to give auditing services to an issuer for the previous 5 fiscal years of the issuer in the business. With this, the auditor can only give auditing services to an issuer for a certain number of fiscal years to avoid any cover up in the auditing of the transactions of the issuer. There were already a lot of auditing scandals that proven to be internally covered up and most of the persons involved are the auditor or auditing firm and some officials of the issuer. This brought the auditing system to become more complicated as it is right now.
findlaw.com. (2007). Sarbanes-Oxley Act of 2002 [Electronic Version], 66. Retrieved 9-9-07 from news.findlaw.com/hdocs/docs/gwbush/sarbanesoxley072302.pdf.
Cite this Essay – Auditor Fees
Essay – Auditor Fees. (2016, Aug 06). Retrieved from https://graduateway.com/essay-auditor-fees/