Problem: The following comments summarize the beliefs of some practitioners about the Sarbanes-Oxley Act and the PCAOB.
The Sarbanes-Oxley Act is unnecessary regulation of the profession. The costs of requirements such as reporting on the effectiveness of internal control over financial reporting greatly exceed the benefits. These increased costs will discourage companies from issuing publicly traded stock in the United States. The regulation also gives a competitive advantage to national CPA firms because they are best prepared to meet the increased requirements of the Act. Three things already provide sufficient assurance that quality audits are performed without PCAOB oversight. They are competitive pressures to do quality work, legal liability for inadequate performance, and a code of professional conduct requiring that CPA firms follow generally accepted auditing standards.
1) State the pros and the cons of those comments.
2) Evaluate whether the Sarbanes-Oxley Act and PCAOB regulation are worth their cost.