The number of financial restatements by US companies has fallen significantly over the last five years, according to new research from Audit Analytics.
Likewise, incidences of ineffective internal control over financial reporting (ICFRS) under Sarbanes-Oxley for the Russell 1000 has significantly declined, from 8.21% in 2005 down to .83% in 2010.
The report provides a number of measurements of the effects of Sarbanes-Oxley and the overall quality and reliability of public company financial reporting.
Other findings include:
- Both the Russell 1000 and the Russell 2000 companies with auditor tenure of five years or less paid substantially more in audit fees (per million dollars in revenue) than companies with longer tenure.
- 16.1% of Russell 1000 companies have engaged the same auditor for 40 or more years.
- 96.8% of the companies that engaged their auditor for 40+ years also reported audit committee member changes in the last six years.
- Nearly 50% of the Russell 1000 have reported at least one CFO change in the last six years.
For details, see Auditor Tenure and Financial Officer Turnover
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