Section 404 of the Sarbanes-Oxley Act (SOX) is credited with improving internal financial control systems in public companies even if the cost of doing so is thought to be exorbitant by small firms.

Question

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Section 404 of SOX mandates that companies develop and maintain internal control structures and procedures for financial reporting. While the cost of compliance may be high, studies have shown that it has led to improved internal controls and financial reporting quality in public companies. Small firms may find the cost to be disproportionate to their size, but the benefits are recognized as being significant.

Section 404 of the Sarbanes-Oxley Act (SOX) Is Credited with Improving