A Vote of Support for Sarbanes-Oxley

Debate has raged over whether cracking down on corporate fraud meant Sarbanes-Oxley's stringent provisions would unfairly burden businesses. While a new survey on corporate audits certainly doesn't settle the issue, it found that most members of public companies' audit committees believe that audits now are "very good" or "excellent."

And 82 percent of those participating think audit quality has improved in recent years, according to an online survey conducted in January and February by the Center for Audit Quality, an organization that is affiliated with the American Institute of Certified Public Accountants.

Little more than half of the 253 committee members responding — all of whom had served on at least one company audit committee last year — said overall audit quality is "very good," and 25 percent said it is "excellent," according to the survey.

About 87 percent said the risk of inaccuracies in financial statements due to fraud is "not very high," and nearly two-thirds answered that Sarbanes-Oxley's passage — in the wake of the Enron debacle — helped reduce the risk. That's because of increased audit committee oversight, stricter internal controls, executive sign-off on financial statements, and more rigorous audits, they overwhelmingly agreed.

The findings mirrored the results of the Center's poll of investors last July — where 80 percent of investors had confidence in audited financial information.

"The findings confirm that public company audit quality is high and has only gotten better in recent years, according to the people closest to the process," said the center's executive director, Cindy Fornelli.

Despite the hearty vote of confidence in Sarbanes-Oxley, investors in Bear-Stearns — and, in fact, those of many high-flying financial institutions — must be wondering just how its audit committee members would explain the enormous financial discrepancies that surfaced in recent days.

by Elizabeth Olson