July 28, 2007

Center for Audit Quality Survey Finds Majority of Nation's Investors Support Sarbanes-Oxley, Believe Rules Mandate By Act Should Not Be Eased

~~Findings Released In Conjunction With Law’s Fifth Anniversary ~~

Washington, D.C. – Expressing confidence in the capital markets and audited financial information, two-thirds of investors would be concerned by any easing of rules mandated by the Sarbanes-Oxley Act, according to a national survey conducted for the Center for Audit Quality (CAQ). 

The nationwide telephone survey of 1000 investors explores opinions about the legislation and its various components, the strength of the U.S. capital markets and the impact of the Sarbanes-Oxley Act on investor confidence. 

The findings were released in advance of a CAQ event at the National Press Club on July 30, the day the Act was signed into law five years ago. 

The survey found that a large majority of investors have confidence in the U.S. capital markets (84 percent) and in the financial information provided by public companies (80 percent), with 79 percent saying changes brought about by the Sarbanes-Oxley Act bolster their confidence in that information. Importantly, 62 percent of those participating in the survey believe the rules mandated by the Act should be left fundamentally as they are, with two-thirds saying they would be concerned by any easing of the 
rules. 

“The fifth anniversary of the Sarbanes-Oxley Act is a good opportunity to take a step back, to examine its accomplishments, and to consider its future. There should be a robust discussion among all participants in the capital markets. Investor opinions are a critical part of that, and their confidence in our markets and in the reforms of the last five years is heartening,” said Cindy Fornelli, executive director of the CAQ. “Going forward, we must continue to pursue the balanced approach that the Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) have pursued regarding adjustments to the implementation of Sarbanes-Oxley – with the twin goals of protecting investors and the markets.” 

According to the survey, investors believe Sarbanes-Oxley-mandated changes regarding controls around how companies prepare their financial statements and how external public company audit firms audit those controls have had a positive effect:

  • 79 percent believe the requirement to establish independent audit committees has been effective.
  • Three-quarters (76 percent) say that external auditors reporting to independent board-based audit 
    committee has had a positive impact.
  • 76 percent say PCAOB involvement has been effective.
  • 76 percent believe the requirement for companies to evaluate and disclose their internal controls 
    and for external auditors to attest such disclosures has been positive.
  • 74 percent say certification of financial reports by CEOs and CFOs has had a positive effect.

The CAQ was created to serve investors, public company auditors and the markets. The Center’s mission is to foster confidence in the audit process and to aid investors and the capital markets by advancing constructive suggestions for change rooted in the profession’s core values of integrity, objectivity, honesty and trust. The organization is affiliated with the American Institute of CPAs. 

Conducted by Glover Park Group, the survey and a summary of its findings are available at www.thecaq.org.