外文翻译--后萨班斯时代的内部控制缺陷报告：审计人员与公司治理的作用

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1、中文 3685 字 本科毕业论文（设计） 外 文 翻 译 外文出处 International Journal of Auditing 外文作者 Gopal V. Krishnan Gnanakumar Visvanathan 原文： Reporting Internal Control Deficiencies in the Post-Sarbanes-Oxley Era: The Role of Auditors and Corporate Governance This study addresses the role of audit committees and auditors i

2、n the reporting of internal control deficiencies after the passage of the Sarbanes-Oxley Act (SOX). We find that a higher number of meetings of the audit committee, lesser proportion of financial experts in the audit committee, and more auditor changes characterize firms that report weaknesses in th

3、eir internal controls compared to firms with no weaknesses. Prior restatements of financial statements are also higher for firms that report weaknesses in internal controls. These results obtain after controlling for a variety of firm characteristics such as complexity of operations, profitability,

4、and growth. Our results underscore the importance of governance characteristics beyond general firm characteristics in examining the reporting of internal control weaknesses. SUMMARY The Sarbanes-Oxley Act enacted significant regulations concerning corporate governance and financial reporting includ

5、ing the reporting of internal control deficiencies. This paper provides an assessment of the role of two key players, namely audit committees and auditors in the reporting of internal control deficiencies. Both corporate governance and the role of external auditors have received considerable critica

6、l attention consequent to reported accounting scandals at several firms. The quality of governance and the external auditors are likely to play important roles in maintaining good internal controls that are critical to the integrity of financial reporting. We examine a sample of firms that reported

7、internal control deficiencies under section 404 of the Sarbanes- Oxley Act and assess the characteristics of audit committees and auditors for these firms. To this end, we compare firms reporting internal control deficiencies with firms of similar size in the same industry that do not report such de

8、ficiencies. We find that firms that report internal control weaknesses are characterized by audit committees that meet more often and have a lesser proportion of directors who qualify as accounting financial experts. Firms reporting weaknesses are also characterized by greater number of auditor chan

9、ges and prior restatements of financial statements. These results should be of interest to investors, auditors, and regulators who are interested in imposing new governance rules. INTRODUCTION A significant feature of the Sarbanes-Oxley Act (SOX) (US Congress 2002) is section 404 that requires manag

10、ements assessment of the companys internal controls over financial reporting and an auditors opinion on the managements assessment.1 Implementing section 404 has become the top focus of audit committee members and the enormous costs of implementation have invited some criticism (Solomon & Peecher, 2

11、004).2 The objective of this study is to provide preliminary empirical evidence on the role of two important governance agents, audit committees and auditors, in reporting internal control deficiencies required under section 404 of the SOX. In studying the disclosures on internal controls under sect

12、ion 404, we assume that firms that report internal control weaknesses are the only firms with such weaknesses and firms that do not report any such weaknesses (firms that we use as control group) are not subject to weaknesses at the time of the study. While we have verified that control firms did no

13、t report any weaknesses at the time of the study, it is possible that some of these firms had internal control weaknesses but report them in subsequent periods. To the extent we have misidentified a control firm as one without a weakness, the procedure biases against finding any significant results.

14、 We contribute to the literature on internal controls, impact of SOX, and the role of audit committees. Our finding that the audit committee activity rather than its composition is associated with the timely reporting of internal control deficiencies suggests that future studies have to examine attr

15、ibutes of governance other than size of audit committee or the number of independent directors because the changes brought about by SOX essentially create uniformity in these variables. Our finding that firms that report internal control deficiencies have lesser proportion of financial experts sugge

16、sts that the role of expertise is better examined by defining it as a proportion rather than as a dummy variable as done in many auditing studies. Finally, we highlight the role of prior restatements in addressing firms that report weak internal controls as restatements occur more for these firms an

17、d the restatements have a significant impact in altering governance structures. HYPOTHESIS DEVELOPMENT The role of audit committees in developing and maintaining sound internal controls has been demonstrated by several studies (BRC, 1999； DeZoort, 1997； Carcello et al., 2002). Prior studies have als

18、o examined the broader role of audit committees with respect to earnings manipulation and restatements (Klein, 2002； Abbott et al., 2004). J. Krishnan (2005) hypothesizes that firms that report internal control deficiencies in the pre-SOX period have audit committees that are smaller, less independe

19、nt, and have lesser expertise compared to firms that do not report deficiencies. Prior to SOX, decisions on composition of the audit committee such as number of directors and proportion of independent directors were for the most part voluntarily made by companies.Under SOX, audit committees role has

20、 been substantially strengthened and specific requirements on the composition of the committees have been proposed. For example, all directors serving on the audit committees are expected to be independent directors and companies should disclose if they have at least one committee member who qualifi

21、es as a financial expert (SEC, 2003).The New York, American, and NASDAQ stock exchanges have adopted new rules for listing purposes that require at least three directors in audit committees and that at least one member of the committee be a financial expert (NYSE Rule 303A and NASDAQ Rule 4350(d)(2)10 Such regulatory changes imply that companies are likely to have a great deal of similarity in the composition of their audit committees.