We examine the relation between nonaudit fees and SOX 404 opinions on the effectiveness of a client's internal control over financial reporting. We find a negative association between nonaudit fees and the auditor's propensity to issue an adverse SOX 404 opinion during 2004-2006 (when AS2 was...

Section 404b of the 2002 Sarbanes Oxley Act (SOX) requires auditors to attest to the effectiveness of a client's internal control over financial reporting (ICFR). In this paper, we provide an overview of key regulatory events in the implementation of the 404 internal control audit. We discuss...