The Sarbanes-Oxley Act of 2002 was one of the greatest and furthest reaching overhauls the accounting industry has ever seen. The Act forced public accounting firms to drastically change the way they do business and forced public companies to spend great sums of money to become compliant with the law. The Act provided for much more regulation of the public accounting industry. In addition, the Act increased the responsibility of management when it came to financial reporting. Because of the high transition costs and additional costs to remain compliant and pay for longer audits, the Act was viewed in a very negative light, especially in the first few years of its existence. However, following the release of Auditing Standard 5 by the PCAOB, public companies, which had previously viewed the additional costs as having no tangible benefit, began to realize some incentives to complying with the Act. Most notably, companies saw an improved quality of financial reporting accuracy and reliability, improved quality of the financial reporting process and audit process, and improved efficiency and effectiveness of other business processes.
