How to Comply with Sarbanes-Oxley Section 404: Assessing the Effectiveness of Internal Control
Effective in 2004, as a result of Section 404 of the Sarbanes-Oxley Act of 2002, all public companies will be required for the first time to submit an annual assessment of the effectiveness of their internal control to the SEC. Additionally, each corporation’s independent auditors are required to audit and report on management’s internal control reports, just as they audit the company’s financial statements. How to Comply with Sarbanes-Oxley Section 404 provides a comprehensive, practical, and structured approach for the testing and evaluation of internal control required by Sarbanes-Oxley Section 404.Drawing on original material by an expert in auditing and accounting, How to Comply with Sarbanes-Oxley Section 404 features a step-by-step process for evaluating a company’s internal control and proving these systems are effectively in place. This hands-on resource is packed with such practice aids as forms, checklists, illustrations, diagrams, and tables to assist anyone who participates in the planning or performance of an evaluation–including CFOs, internal auditors, and outside consultants.Clearly and logically organized to make the material as accessible as possible, How to Comply with Sarbanes-Oxley Section 404 covers:Management’s required assessment of the entity’s internal controlConsiderations for outside consultantsControls over information technology systemsCoordinating with independent auditorsDocumenting your planning decisionsHard-to-test entity-level control objectivesWhat auditors expect from management’s evaluation processDocumentation: what it is…and is notAssessing the adequacy of existing documentationInternal control reliability modelEvaluating the design and implementation of Sarbanes-Oxley automated compliance toolsAn action plan for testing and evaluating entity-level controlsOperating effectiveness: test design considerationsAnnual and quarterly reporting requirementsExpanded reporting on management’s responsibilities for internal controlExample disclosures of a material weaknessExample reports on management’s responsibilities for reporting and internal control