This paper was published as a Faculty Working Paper (no. 217) for the Lubin School of Business, Center for Applied Research, December 2005.

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A survey investigation of the value of an external audit was undertaken in the summer of 2004 that was based primarily on the same questions that were used in a similar survey completed in 1984. Because of changes in auditing and the new regulatory structure, the question arose about the perception of such changes among the sample from the Fortune 500 used in the survey. Four additional questions were added to those used in the original survey that sought opinions related to the implementation of the Sarbanes-Oxley Act of 2002.

Among the key conclusions were these:

1. There has persisted the opinion that the external audit does add value. The percentage in 2004 responding “yes” was 92.5; in 1984, the percentage was 95. 2. Key value of an audit in 2004 was “we believe the audit is required for credibility of our financial statements.” (41.2 percent); key value in 1984 was “external audit imposes discipline on our financial reporting process.” (74.0 percent)

The additional questions related to Sarbanes-Oxley Act of 2002 were in line with comments in the business press. The majority of respondents indicated uncertainty about the value and impact of the Act’s new structure.