Sarbanes-Oxley regulations have left many public company executives confused about what can and cannot be discussed with their auditors, according to Marjorie Bailey, an officer of San Francisco-based CPA firm Stonefield Josephson.

"The communication between auditors and the executives of public companies has increased due to the Sarbanes-Oxley Act, but the topics under discussion are more restricted than in the past," says Bailey. "If you have stopped asking your auditor's advice, you are missing an important opportunity."

"Auditors are increasingly concerned about maintaining their independence as a result of SOX. This has left many auditors gun-shy about providing information that can be valuable to the executives of public companies," says Bailey. "Nevertheless, public company executives and their auditors must make an effort to communicate to produce an environment that is conducive to sharing ideas and information."

Bailey says SOX shouldn't mean the end of open communication between public company executives and auditors. She offers the following tips to help executives or board members of a public companies make the most of their relationship with their audit firm.Don't be afraid to ask questions. Executives and board members shouldn't hesitate to ask questions of auditors, even if they're unsure whether an answer is permitted. "Your auditor is aware of what can and cannot be asked and will respond accordingly," says Bailey.Learn about new pronouncements. Bailey suggests that board members and executives ask their auditors about new pronouncements on a regular basis, and discussions should go beyond simply understanding new rules. "Your auditor may have ideas on how to respond to the pronouncements -- ideas that can reduce frustration and save time. Ask how new pronouncements may affect loan covenants and operating results. Explore how the pronouncements may affect the business going forward," says Bailey. Also, ask about pending rules and consider early adoption if pending legislation results in better management.Discover new ways to improve management and operations. Auditors know how to improve corporate governance, reduce the risk of fraud and lower operating costs. "Auditors can tell you how companies in your industry deal with sticky corporate governance issues," says Bailey. "They can tell you how other firms operate efficiently, from back-office operations to inventory control." While auditors may be restricted from helping clients develop internal control policies, they can tell you how others are tackling SOX challenges, says Bailey. "Progressive companies view the SOX environment as an opportunity to develop better management and tighter operations."

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