Internal fraud controls generate divisions

New regulatory standards governing the efficiency of a company's internal controls against fraud have caused a rupture in the relationships between some senior executives and their outside audit firms, a group of directors and executives warned yesterday.
The comments were made at a roundtable discussion held by the Securities and Exchange Commission, the financial regulator, on Section 404, a set of rules that came into effect following passage of Sarbanes-Oxley in 2002.
"I think the audit firms are afraid . . . I'm worried about these relationships going forward," said Barbara Franklin, a former US Commerce Secretary and a director at Aetna, Dow Chemical and other companies.
Tensions between executives and their auditors are centred around the increasing fees firms are charging companies to comply with the new rules .