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J.D. Power and Associates Reports: Sarbanes-Oxley Takes Toll on Industry Confidence and Client Ratings of Accounting Firm Performance

J.D. Power and Associates Reports: Sarbanes-Oxley Takes Toll on Industry Confidence and Client Ratings of Accounting Firm Performance

by Rick Turoczy on November 9, 2004

The stress of meeting the requirements for corporate financial accountability is taking a toll on confidence and client ratings within the accounting industry, according to the J.D. Power and Associates 2004 Audit Firm Performance Study(SM) released today.

The study, which measures audit firm performance in the wake of the Sarbanes-Oxley Act of 2002, is based on interviews with 1,007 audit committee chairs and 944 chief financial officers.

The study finds a significant amount of angst among audit committee chairs and CFOs in the industry. Top management is concerned about the costs of implementing the extensive requirements associated with Sarbanes-Oxley compliance. Some auditors feel they are being stretched too thin because of additional audit requirements, which are impacting service levels. Also, audit committee chairs are feeling the pressure of increased accountability of the required financial reporting process. The results of this are low accounting firm performance levels compared to other business-to-business studies, and a decline in the confidence level of the accounting profession.

Furthermore, almost 9 out of 10 CFOs say the costs of implementing the new rules and procedural requirements of Sarbanes-Oxley are greater than the benefits of those changes. Confidence is also particularly low among CFOs, with just 44 percent expressing high levels of confidence in the accounting industry.

J.D. Power and Associates Reports: Sarbanes-Oxley Takes Toll on Industry Confidence and Client Ratings of Accounting Firm Performance

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