The audit field could be changing very soon. President Trump wants to scale back some sections of the Sarbanes-Oxley Act. Specifically, he wants to take out Section 404B, which requires public companies to have an audit of their internal controls done.

The Sarbanes-Oxley Act was put in place after the Enron and WorldCom financial disaster in 2002. Section 404B of the Sarbanes-Oxley Act is the main firewall to prevent another scandal like that from happening again. It requires auditors to express an opinion about how effective the internal controls of a company are.

I think that section 404B has to stay in the Act. It is so important that companies are having these internal control audits performed annually. Without the SEC requiring that these audits be done, companies would, in my opinion, become complacent within a few years.

President Trump’s argument is that these internal control audits are extremely expensive for companies, which is discouraging private companies from ever going public. This may be true, but the benefit of having these audits done, especially for the shareholder, vastly outweighs the cost of the audit.

Since the Sarbanes-Oxley Act was implemented in 2002, there has not been a major accounting scandal that significantly hurt shareholders of public firms. The Sarbanes-Oxley Act is working. I know President Trump is very pro-business, but why try to fix something that isn’t broken?