Balancing the Costs and Benefits of Auditing and Financial Reporting Regulation Post-SOX, Part I: Perspectives from the Nexus at the SEC

From August 2006 through July 2008, while on leave from the University of Southern California, the author served at the Securities and Exchange Commission (SEC) as Deputy Chief Accountant for Professional Practice in the Office of the Chief Accountant. This article shares some experiences and offers insights on some of the initiatives in which the author was involved during her time at the SEC. This article appears in two parts. During her time at the SEC, much effort focused on improving the implementation of Sarbanes-Oxley Act of 2002 (SOX) Section 404. Akin to a case study, Part I provides background, overviews the problems, describes the efforts of the SEC and the Public Company Accounting Oversight Board to correct these problems, and suggests some lessons to take-away from the 404 "saga." In turn, Part II discusses a number of other SEC initiatives and activities and assesses the state of regulation of public company audits post-SOX.