This is a study from the SEC. It contains very interesting information on 404 and the benefits investors found in companies which complied with 404.
"Benefits of 404 Expressed By Investors"
- Separate annual evaluations of ICFR by the auditor increases investors and other users' confidence in the quality and reliability of companies' financial reports for a variety of reasons
- Process causes management to devote more resources to a disciplined financial reporting process including 1) better understanding of financial reporting risks, 2) put in place controls to address those risks, and 3) address control issues more timely.
- Independent audit of ICFR provides an incremental benefit to management's assessment
- Provides necessary discipline to management's financial reporting process and assessment (similar to the audit of the financial statements)
- Auditor's professional expertise in evaluating internal controls benefits management's evaluation by providing their perspective to a company's internal controls, which fosters improved evaluations and more timely and/or effective improvements in internal control. This, in turn, provides a benefit to investors due to improvements to the financial reporting that the above process engenders.
- Section 404 compliance was an appropriate use of a company's resources given the improvements it facilitates to a company's financial reporting.
- Companies have also noted benefits of 404 compliance
- 73% of companies noted that Section 404 compliance improved the quality of their internal control structure
- 49% noted that it improved the quality of a company's financial reporting
- 48% noted that it improved the company's ability to prevent and detect fraud"
View the full study here.