On Tuesday, the two chief Sarbanes-Oxley Act (SOX) supervisors, gave their testimonies to their supervisor, the US House of Representatives' Committee on Financial Services. Christopher Cox of the Securities and Exchange Commission (SEC) confirmed his view that SOX had succeeded in its aims and that the issues of Section 404 were not in the regulation but in the method of its implementation. In this he was supported by Mark Olsen, Chairman of the PCAOB, the body set up to replace the audit profession’s previous self-regulation with an independent oversight body.
Initially in the hearing, Michael Oxley, the soon-to-retire Chairman of the Committee and main instigator of the Act that bears his name, said "I believe the Act has been a success. More Americans than ever are invested in the market: over 53 million households own mutual funds, a nearly nine-fold increase from my first day on the job. Americans now have $9.5 trillion invested in mutual funds, 35 times as much as in 1981." He also emphasised that SOX would only apply to companies listed in the US. In this, he was supported by all the other speakers, and Congressman Paul Gilmor stated that "[SOX] will not apply to such companies in the event of a merger between a US market and a foreign one. On the contrary, a merger between a US market and a non-US market will enable those markets to continue to operate under their own domestic laws, while expanding economic opportunities for parties in both markets."
Cox underlined the view that Sarbanes-Oxley was a success by noting that many countries were adopting SOX-like regulations such as the independent auditor oversight bodies, the restrictions on auditor conflicts of interest and the need for management assessment of their internal controls (the first part of the much-criticised Section 404). He said, however, "The problems we have experienced with Section 404 arise from the implementation of the second half of this provision: the part that requires an auditor evaluation of management’s assessment. And just as in America, that aspect has proven more controversial abroad than the assessment itself." Olsen then described four goals in promoting efficiency and eliminating unnecessary audit procedures – eliminating certain requirements, simplifying the standard, making current guidance explicit, and taking a risk-based approach to the audit. These, plus further guidance and changes regarding small businesses, were intended to counter the criticisms of Sarbanes-Oxley that have emanated from sections of US Government, Wall Street, small US companies and the European business community.
| 
