Sox Section 201
§201 of the Sarbanes-Oxley Act of 2002 specifies those activities which a public accounting firm cannot do if they are performing an audit for a company. The firm cannot provide: “(1) bookkeeping or other services related to the accounting records or financial statements of the audit client; (2) financial information systems design and implementation; (3) appraisal or valuation services, fairness opinions, or contribution-in-kind reports; (4) actuarial services; (5) internal audit outsourcing services; (6) management functions or human resources; (7) broker or dealer, investment adviser, or investment banking services; (8) legal services and expert services unrelated to the audit; and (9) any other service that the Board determines, by regulation, is impermissible” (Sarbanes-Oxley Act of 2002 §201).
Some reasons a firm should be able to perform both audit and other assurance services for the same company could include:
• Performing both the internal and external audit functions could help to eliminate errors that would lead to material misstatements.
• Providing assistance to the company with regards to its accounting system could help to decrease time required during the audit.
• Valuation services provided by the audit firm could help to reduce errors in financial instruments.
Reasons that a firm should not perform audit and other, separate functions could include:
• The AICPA Code of Professional Conduct maintains that there must be independence in regards to attestation services. Performing both types of services would severely limit independence.
• Having too much influence in a company by performing audit, internal audit, and management consulting services could be of great concern if legal action was, for some reason, brought against the
Some reasons a firm should be able to perform both audit and other assurance services for the same company could include:
• Performing both the internal and external audit functions could help to eliminate errors that would lead to material misstatements.
• Providing assistance to the company with regards to its accounting system could help to decrease time required during the audit.
• Valuation services provided by the audit firm could help to reduce errors in financial instruments.
Reasons that a firm should not perform audit and other, separate functions could include:
• The AICPA Code of Professional Conduct maintains that there must be independence in regards to attestation services. Performing both types of services would severely limit independence.
• Having too much influence in a company by performing audit, internal audit, and management consulting services could be of great concern if legal action was, for some reason, brought against the