Sarbanes Oxley Act was included in United States’ legislation from 2002. The Act was introduced to regain investor confidence as a response to the business scandals of Enron, Worldcom and others. Upon its introduction, Sarbanes Oxley Act got a lot of attention and media coverage due to its demands on companies and their auditors. In the years following the Act’s introduction, several attempts have been made to determine whether the Act has increased investor confidence. No generally accepted conclusion has been reached. The objective of this paper is to determine the effect that Sarbanes Oxley Act has had on Danish and European legislation. The objective is furthermore to describe and analyze the differences in the United States’ and Denmark’s legislation on the area. Finally it will be determined whether a statement from auditors on internal controls will be valuable to financial statement stakeholders. Legislation similar to Sarbanes Oxley Act has not been introduced in Denmark. The EU’s 8th Directive requires the auditors to inform the company’s Auditing Board in case of deficiencies in the company’s internal controls and the EU’s 4th obligated the company’s management to provide a statement on the company’s risk management systems and internal controls. In Denmark, auditing standards are used to regulate auditors work. Standards 315 and 330 are in place to ensure that the auditor closely evaluates risks in the areas that are audited and that the auditor work to reduce risks. PCAOB’s auditing standard no. 5 has relaxed the auditors obligation to analyze the company’s internal controls. The differences that exists between American and Danish legislation has made it interesting to analyze whether the discussions on Sarbanes Oxley Act has had an effect on the Danish users of financial statements. Based on the survey in this paper it is concluded that there is a clear gap between expectations to the auditors work and the work actually carried out. The survey shows that Sarbanes Oxley Act is not well known. This makes it difficult to judge whether similar legislation would be valued among Danish stakeholders, it can be concluded however that stricter rules on internal controls will have value to the stakeholders. There is no consensus as to whether a statement from auditors on internal controls will rule out business scandals in Denmark. Stakeholders do, on the other hand, agree that such a statement would make them feel safer when investing. On the basis of the survey in this paper it cannot be concluded that Danish stakeholders see a need for legislation similar to Sarbanes Oxley Act. It can however be concluded that focus on internal controls has increased and that this adds value to financial statement stakeholders.
|Educations||MSc in Auditing, (Graduate Programme) Final Thesis|
|Number of pages||94|