The perceived effectiveness of the Sarbanes-Oxley Act of 2002 in improving audit quality: A multiple constituency approach

In early December of 2001, Enron Corporation filed for bankruptcy protection and became one of the most glaring examples of audit failure in recent memory. Enron's questionable, if not fraudulent, accounting practices, off-balance sheet partnerships, and political contributions have once again raised questions concerning the quality of auditing and the accounting profession's ability to regulate itself.; Congress, eager to prove it was not idle in response to the corporate scandals, passed the Sarbanes-Oxley Act of 2002. The Act is a broad measure that encompasses many different areas including a new public oversight board, prohibitions of certain services provided by accounting firms, executive officer certification of financial information, and numerous disclosure requirements.; The perceived effectiveness of the Sarbanes-Oxley Act of 2002 was evaluated by surveying the different constituencies affected by the Act. Using a multiple constituency approach, accountants, bankers, financial analysts, internal auditors, and educators were surveyed concerning the purpose of the Act, the effectiveness of the Act in achieving that purpose, and the effectiveness of the Act in improving the quality of auditing, financial reporting, and corporate governance.; The results of this study suggest that the constituent groups are in agreement concerning the primary purpose of the Act. The top three purposes of the Act, ranked by importance, were to improve the accuracy, reliability, and transparency of corporate reports, to restore investor confidence in the financial markets, and to prevent fraud in the future. In addition, with the exception of the banking constituent, it appears that the constituent groups agreed upon the level of effectiveness of the Act.; The last three hypotheses of the dissertation relate to the Act's ability to improve the quality of auditing, financial reporting, and corporate governance. In each of these cases, there is partial support for the hypothesis, in that, some of the constituent groups are in agreement concerning the Act's impact on improving quality. However, there is still some significant disagreement among the groups on the key issues of scope of services, the financial reporting process, full disclosure, mandated governance, and regulation.