Abstract：This study examines whether the effectiveness of the audit committee and the board of directors is associated with firms’ timeliness in the remediation of material weaknesses (MWs) in internal control. The sample comprises accelerated filers that disclosed at least one MW from July 2003 to December 2004 under Section 302 of the Sarbanes-Oxley Act (SOX). Using logistic regression analyses, I find that firms with larger audit committees, audit committees with greater nonaccounting financial expertise, and more independent boards are more likely to remediate MWs in a timely manner. These results show that the audit committee and the board play an important role in monitoring the remediation of MWs. Overall, the study contributes to our understanding of the effectiveness of the audit committee and the board under the SOX regime. The study also identifies important determinants of firms’ timeliness in the remediation of MWs, which is key to improving financial reporting quality and restoring investor confidence. Key words: Sarbanes-Oxley Act, internal control, audit committee, board of directors
JEL codes: G30, G38, G39, M40, M42
vf超市管理系统论文(概述+需求分析+ER图+参考文献)1. Introduction
The Sarbanes-Oxley Act (SOX) was passed in 2002 in response to a series of accounting improprieties at well-known companies such as Enron and Worldcom. One important aspect of SOX is the internal control requirements. Section 302 of the Act (SOX 302) requires that management evaluate the effectiveness of disclosure and control procedures, report results of the evaluation, and indicate any “significant changes” in internal controls since the last 10-K or 10-Q report (SEC 2002). In addition, Section 404 of the Act (SOX 404) requires that management’s assessment of the effectiveness of internal control over financial reporting and auditors’ attestation on management’s assessment of internal control over financial reporting be included infirms’ 10¬K reports (SEC 2003a) . The heightened attention to internal control can enhance the reliability of financial statements by helping companies to identify internal control deficiencies and remediate these deficiencies in a timely manner[1] 本文来自辣.文~论^文'网原文请找腾讯324,9114
Prior to SOX, little was understood about the remediation of internal control deficiencies due to the lack of publicly available data on internal controls. The remediation of internal control deficiencies is important because these deficiencies can undermine the quality of a firm’s financial reporting, as proxied by accruals quality (Ashbaugh-Skaife et al. 2007a; Doyle et al. 2007a), and the remediation of these deficiencies can improve the quality of financial reporting(Ashbaugh-Skaife et al. 2007a) . Furthermore, Moody’s has indicated that the existence of ongoing internal control problems can trigger negative rating action against the firm (Moody’s 2006), highlighting the need for remediation of internal control deficiencies to restore confidence in financial reporting. The prompt remediation of these deficiencies also sends a strong signal to the market that the firm is committed to and competent in ensuring credible financial reporting. Following prior evidence that the quality of the audit committee is associated with the quality of financial reporting and internal controls (Carcello and Neal 2000; Krishnan 2005), this study examines whether corporate governance mechanisms, specifically the audit committee and the board of directors, play an important role in monitoring the remediation of internal control deficiencies.
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