| This research lays the foundation for a theoretical construct of a possible model for the application of enterprise risk management concepts as applied to Sarbanes-Oxley compliance in the context of accounting audit practice. As such this research constructed a model in which two stages were implemented. The first stage consisted of the gathering of information from Security and Exchange Commission (SEC) litigation cases filed against publicly traded corporations, which were in the public domain. Stage two consisted of gathering financial data from publicly traded corporations randomly selected from the SEC litigation files using 10K reports, which were in the public domain. A regression analysis was applied to determine the level of Sarbanes-Oxley compliance by examining the level of general and administrative expense, the presence of outside directors, the length of time, measured in years, that the external auditor has maintained the client relationship, the number of CPAs serving on the audit committee, and the general level of support for Sarbanes-Oxley compliance based on corporate policy. Results indicate a low moderate R-squared value for the model, using square-root data transformation, indicating that early theories of how corporate financial fraud can be curtailed need further study. |
