The Journey of SOX, PCAOB, AS2, and AS5 in the Management’s Assessment of Internal Control Over Financial Reporting

The rise of fraud companies led the investors to hide from the market, and thus, the flow of investment in the trading market reduced dramatically. The Accounting Committee needed to stop the misconduct of the companies in providing false financial statements. Therefore, Sarbanes-Oxley Act (SOX) Section 404 was established to mandate the publicly traded companies to provide an auditor’s report on their internal control over financial reporting. This paper focuses on the functions of SOX, Public Company Accounting Oversight Board (PCAOB), Auditing Standard 2, and Auditing Standard 5.