| This quantitative study examined, analyzed, and compared the Section 404 audit fees of the Sarbanes-Oxley Act (SOX) for 668 large accelerated and accelerated U.S. manufacturing companies with calendar year ends 2005 to 2008 before and after the enactment of Auditing Standard No. 5 (AS5) as well as determined if there was a difference in those fees based on the type of internal control report (effective versus ineffective) issued by the external auditor. The results of this quantitative study found that after increasing by 40.54% in 2007 and by 34.68% in 2006, average SOX Section 404 audit fees decreased by 28.38% in 2008. The results of this quantitative study also found that SOX Section 404 audit fees were not affected by the type of internal control report issued by the external auditor for any of the four years examined - 2008, r(668) = .035, p = .399; 2007, r(668) = .031, p = .449; 2006, r(668) = .027, p = .513; and 2005, r(668) = .057, p = .173. The perceived effectiveness of the external auditor's internal control report on management's self-assessment of internal control over financial reporting (ICFR) to enhance public confidence in financial reporting was analyzed, examined, and compared before and after its elimination under AS5 by surveying the members of four U.S. constituency groups (corporate executives, bankers, certified public accountants, and lawyers) most affected by SOX. The results of this quantitative study found that there were statistically significant differences in the means among the four U.S. constituency groups regarding their perceived effectiveness of the external auditor's internal control report on management's self-assessment of ICFR to enhance public confidence in financial reporting before the elimination v of the internal control report (ICR) under AS5, F(3,413) = 5.615,. p = .001 and after its elimination under AS5, F(3,413) = 8.802,. p = .000. The decline in SOX Section audit fees suggests that AS5 seems to be having an effect on reducing audit costs associated with SOX Section 404 compliance. Further research should include an examination of the factors that cause SOX Section 404 audit fees to decrease under AS5. |
