Auditors’ and Governmental Financial Officers’ Views on Expanding the Sarbanes-Oxley Act to the Government Sector

• In Event: Breakfast and Research Forum
  In Roundtable Session: Table 15: Government/Not-for-Profit

Abstract

The Sarbanes-Oxley Act (SOX 2002) has been credited with substantially enhancing the credibility of corporate financial reporting. Consequently, many legislators have called for expanding the scope of SOX provisions to include state and local governmental entities (Mead 2008). We use data from a survey of governmental financial officials (GFOs) and their external auditors to gauge support for SOX-like legislation for governmental entities. GFOs and their external auditors are among those that will be most affected by such legislation. Our first research question [RQ] predicts that auditors and governmental financial officials (GFOs) will not favor SOX-like legislation for governmental entities. Next, we hypothesize that auditors and GFOs will be more supportive of SOX legislation for governmental entities accepting federal funds than for such entities regardless of funding sources. Finally, we hypothesize that GFOs are more likely to support SOX-like legislation for governmental entities than do their auditors. Our data generally support our RQs. Testing several demographic variables, we find that while experience in governmental accounting relates inversely to agreement with SOX-like legislation, educational background (i.e., graduate vs. undergraduate) and familiarity with SOX provisions do not significantly influence subjects’ opinions.

Authors

• Alan Reinstein, Wayne State University

• Mohammad J Abdolmohammadi, Bentley University

• Cathleen L Miller, University of Michigan–Flint