An SEC study of Section 404(b) of Sarbanes-Oxley and its impact on issuers with a public float of $75 to $250 million concluded that investors view auditor attestation of a company's internal controls with a beneficial eye and that there is no conclusive evidence that 404(b) has chilled IPO activity in the US in the range of issuers studied. Section 404(b) requires the outside auditor to attest to the management's 404(a) statement on the effectiveness of the company's internal controls. The study was mandated by Section 989G of Dodd-Frank. The study also found that financial reporting is more reliable when auditors are involved with internal controls. The SEC and the PCAOB effected major reforms in the internal controls reporting regime in 2007, and the study found that the costs of 404(b) have declined since the reforms.
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