M.Com. (Computer Auditing) / In the wake of the economic catastrophes and corporate disgraces such as Enron, WorldCom, Parmalat, and other corporations at the turn of the 21st Century, the United States Senate adopted the Corporate and Auditing Accountability, Responsibility and Transparency Act, which became known as the Sarbanes-Oxley Act of 2002 (hereafter the SOX Act). The concluding bill, the Sarbanes-Oxley Act of 2002, was accepted and approved by the United States Senate on July 25, 2002. The primary motive of the SOX Act is to safeguard shareholders of public corporations by improving, cultivating and ultimately ensuring the reliability and accuracy of corporate disclosure of financial and non-financial information. More than a decade later, many corporations have enhanced their compliance capabilities and competencies, having learned from prior experience and/or earlier SOX fiascos. The envisioned benefits of the SOX Act were to provide the charter and contextual information needed to implement, monitor and review operational and financial processes, reinforce internal controls, and enhance corporate financial reporting. Since the SOX Act forces corporations to conform and comply, the question is; whether SOX compliance can essentially benefit the company’s everyday business as it affects virtually every line of work with the unequivocal purpose of reinstating public confidence in the disclosures included in annual financial statements. The study focuses on how to approach the rudimentary SOX compliance checklist and possibly transform it into an actual value added service for stakeholders and furthermore, how to leverage off the knowledge garnered through complying with the SOX Act – ultimately creating a more effective and resourceful corporation in all financial spheres. By aligning the SOX compliance process with the actual improvement of internal controls, financial processes and ultimately financial reporting, an unprejudiced ambition to identify and manage “real world” risks can be achieved. Ultimately, to comply with the SOX Act might not be an option for public corporations; however, being SOX compliant doesn’t have to be without substantial benefit to a corporation, Senior Executive Management and eventually and ultimately the shareholders.

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V práci se jedná o roli interního auditu v organizacích a zvlášť v českém bankovnictví, o rozvoji interního auditu. Jednou z kapitol je právní a písemná úprava interního auditu; stručný popis zákonů a Standardů, kterými se praxe interního auditu řídí. Značnou části je podrobný rozbor činnosti následujících institucí: finančního arbitra ČR, bankovního ombudsmana České spořitelny, bankovního ombudsmana Komerční banky. Práce také zahrnuje průzkumy trhu, které byly uskutečněné společnostmi Ernst&Young a PricewaterhouseCoopers.

The thesis analyzes moral hazard in corporate governance and brings in actual theoretical knowledge on the topic. It examines four examples of the companies which went bankrupt due to moral hazard of their top management: Enron, WorldCom, Parmalat and IPB. All case studies are assessed in accordance with OECD Principles of Corporate Governance. At the end of the thesis, there are mentioned impacts on legislature and suggestions of possible solutions.

The thesis is focused on state interventions and regulation on field of stock exchanges. On special examples I show for and against argumentation of real precautions. I repeal the questions of public konvenience of these precautions. In the first part of the thesis I begin with historical genesis of exchange especially in our area including the origin -- private or state. The first part continue with theoretical functions of stock exchange and its fulfilment in case of The Stock Exchange in Prague. In the second part I present dilemma of squeeze-out or expropriation of minority shareholders.There will be arguments of proposers, opponents and also neutral arbiter representing by The Constitutional Court of the Czech Republic. In the third part of the thesis I present an example of foreign regulation. It is Sarbanes-Oxley Act with its impact on different entities. In conclusion I propose some changes and I want to give a support to discussion about state admission to regulation of stock markets.

The work deals with ethic porblems of audit profession and their violations. It focus on the definition of the ethical rules in the normative sources. It analyzes accounting scandals in the U.S. at the turn of the 20th and 21 century and their impact. Finally, it discusses the Sarbanes-Oxley Act of 2002, as an main effect of these scandals.

The thesis deals with the issue of fraudulent conduct, detection, investigation and prevention. The first part defines the most common types of fraudulent schemes, including detailed specifications, warning signals and measures to avoid them. Also describes the role and importance of forensic investigation. The second part analyzes the typical offender and the efficiency of detection of fraudulent conduct. The work is completed by tables and graphs that are supported by actual cases of fraud in the Czech Republic and the USA. The third part describes the impact of the Sarbanes-Oxley Act to improve investors protection and prevention in the fight against fraud on the U.S. capital markets.

The thesis aims to raise the knowledge about operation of Sarbanes-Oxley Act and its effective application. The thesis describes historical background and arguments for its creation. It presents each section of the law with a focus on the internal control section. The thesis characterizes recommended methodes of successful application of the SOX Act. The main factors of effective control environment are discussed on the example of the COSO control framemork along with a description of the testing. Then, the thesis examines the impact of the law on external audit. Next chapter clarifies progression of the law followed with an analysis of the impact on the economy and companies. High-quality internal control system has positively influenced accuracy and reliability of the financial statements and has also improved investor´s confidence and reduced likelihood of a fraud. For effective application of the SOX Act it is crucial to understand internal processes and clearly determine the internal control objectives.

This study uses an institutional theory perspective to examine whether significant changes to the audit work and engagement practices required under the Sarbanes-Oxley Act (SOX) lead to improved audit quality in nonprofit hospitals. Unlike their for-profit counterparts, nonprofit organizations have been subject to audits of internal controls over financial reporting and program compliance for decades under Circular A-133 of the Single Audit Act of 1984, as amended. Circular A-133 audits represent the primary accountability tool over the billions of grant dollars awarded annually by the federal government. Despite the enormity of these awards and the substantial informational effect of the audit reports, prior empirical research suggests that the quality of these audits is problematic. Using the archival data of nonprofit hospital Circular A-133 audits and related hand-collected financial data from IRS Form 990s, bivariate and multivariate analyses are conducted on a cross-sectional sample of 875 audits for 141 nonprofit hospitals with audits during both pre-SOX (2001-2004) and post-SOX (2008-2011) periods. Audit quality is inferred from discretionary accruals (Modified Jones model) and auditor-reported internal control deficiencies (reportable conditions and material weaknesses). The results indicate support for improved audit quality from the pre- to the post-SOX period for all measures of audit quality. The results are different for the measures of audit quality used to examine the association between audit firm size and audit quality. Non-Big 4 audit firms experienced a significant improvement in audit quality when discretionary accruals are used as a proxy for audit quality. Conversely, Big 4 audit firms experienced a significant improvement in audit quality when internal control deficiencies are proxies for audit quality. In the post-SOX period audit firms provide approximately the same level of audit quality regardless of firm size when discretionary accruals or material weaknesses are the proxy for audit quality. When reportable conditions are the proxy, non-Big 4 firms have higher audit quality than Big 4 firms post-SOX. Client characteristics, specifically hospital size and the interaction of leverage and risk, are attributable to differences in post-SOX audit quality. Finally, the study fails to support the hypothesis that large audit firms self-select low risk clients.

This study investigates whether the current lack of structure of internal control weakness disclosures (a narrative about the reliability of the financial reporting system) leads nonprofessional investors to make differential investment decisions. Using the non-accelerated filer (smaller public company) setting, where nonprofessional investors are likely to consume unaudited internal control reports in their investing judgments and decisions, I examine two facets of internal control disclosure formats: presentation salience and disaggregation of material weaknesses. A 2 x 2 between-participants behavioral experiment was conducted with internal control presentation salience (bulleted vs. in-text) and disaggregation level (a single material weakness vs. a combination of multiple control deficiencies that is a material weakness). I find that nonprofessional investors reward companies that disclose internal control weaknesses more saliently. The results also indicate that disaggregation interacts with salience in that it increases the effect of salience on investing judgments such that salient (stealth) disclosure of a combination of control deficiencies is viewed more positively (negatively) than salient (stealth) disclosure of a material weakness. These findings are contrary to Rennekamp (2012) who finds that processing fluency in bad news leads to more negative investment judgements. Additional analyses indicated that the results related to management trust and credibility are consistent with prior literature. The findings contribute to academia and practice by shedding light on the importance that needs to be placed on the presentation format of internal control disclosures.