Great Expectations SOX Influence on the Ever-Changing World of Internal Control

Abstract

Background and Problem: After a series of accounting and auditing fraud scandals, a demand for increased control was heard. The most important legislation passed is The Public Company Accounting Reform and Investor Protection Act of 2002, also referred to as SOX. One of the issues regulated is Management Assessment of Internal Controls. We found it interesting to further investigate the subject internal control.

Purpose: The purpose of this research is mainly to smooth the progress of implementation by coming to a conclusion of whether or not the employees of AB Volvo have experienced any changes, where implementation is under progress, in matters surrounding quality, independence, responsibility, and processes in the ways of working. The more general purpose is that other companies on the verge of implementing SOX in their operations can have use of our advice and conclusions.

Delimitations: We are content with only one company of research. We only aim to investigate the effects after the introduction of SOX. Considering that every person with a significant view or experience concerning the topic cannot be interviewed, a delimitation has been made since we have only interviewed six persons.

Methodology: A qualitative study of descriptive and explanatory nature was conducted to gain a deep understanding. We used a partly structured interview approach to obtain as much information as possible and to give the interviewees opportunity to explain any misunderstandings.

Results and conclusion: After the data collection was completed, the different opinions were compiled and analysed to detect what effects of implementation were felt. We came to the conclusion that the enforcement behind the project was poor but once knowledge was spread the acceptance grew due to the expected improved internal control and overlooking of the processes. Greater service ability to the financial reports is achieved as a result of SOX.

Suggestions for further research: It would be of interest to investigate the situation once implementation is working on a day-to-day basis or and once a significant amount of time has passed it can be examined if the legislation has fulfilled its purpose. Even comparisons with other companies would be of interest to see if similar effects have been noticed.