On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of 2002 (SoX), which he characterized as "the most far reaching reforms of American business practices since the time of Franklin Delano Roosevelt." The Act mandated a number of reforms to enhance corporate responsibility, enhance financial disclosures and combat corporate and accounting fraud, and created the "Public Company Accounting Oversight Board," also known as the PCAOB, to oversee the activities of the auditing profession. In particular, Sarbanes Oxley regulation instituted new internal control requirements under section 404 which requires companies to issue a report accompanying the financial statements stating that management is responsible for establishing and maintaining an adequate internal control system. The report must contain management's assessment of the company's internal controls, attest to their accuracy, and report significant weaknesses or material noncompliance. Section 404 of this legislation also happens to be the most controversial section because it is responsible for the majority of the costs businesses have incurred to implement SoX.

Please provide your thoughts to the following questions. As this is meant to facilitate class discussion, please explain / justify whichever position you choose.

1. Did the main benefits of SoX, gains in shareholder confidence that increased equity market participation and liquidity - justify these costs?

2. Do the benefits for corporate governance - increased oversight from board of directors, an increase in the reliability of internal controls and increased power given to audit committees - help to justify the cost?

3. Given what we now know about the 2009 financial crisis and the vast impact to the capital markets, did the Sarbanes Oxley Act go far enough?