What does Sarbanes Oxley Section 404 Address?
Section 404 is a subset of Section 302 and addresses Financial Statement Reporting controls
Under 404, CEO and CFO must:
- Issue Internal Control Report in 2004 Company Annual Report
- Certify Quarterly as to effectiveness of Internal Controls over Financial Reporting beginning 2005The Accounting Firm must:
- Issue two opinions on internal controls over financial reporting in Company 2004 Annual Report: (1) Management’s assessment process and (2) effectiveness of controls
Management’s Sox 404 Responsibilities
- Effective Year End 2004 CEO & CFO must include a report in the Annual Report indicating:
- They have designed and maintained a system of internal controls for financial reporting using a recognized internal control framework
- They have tested internal controls and found them to be designed and operating effectively
The Auditor has evaluated the design and effectiveness of the controls and found them to be operating effectively
- Effective Q1 2005, CEO and CFO must certify quarterly that there are no significant changes to internal controls for financial reporting using a recognized internal control framework.
External Auditor’s Sox 404 Responsibilities
The Accounting Firm (External Auditor) must render two opinions:
- Management’s Assessment Process
- Effectiveness of the company’s internal controls over financial reporting
The Accounting Firm must comply with Public Company Accounting Oversight Board (PCAOB) Audit Standards
In order to render opinions, The Accounting Firm may:
- Review our process documentation
- Perform walk thru’s to validate controls are designed effectively
- Review and re-perform a sample of test of controls
- Perform additional independent tests
- Evaluate controls to ascertain if errors of importance could occur in the financial statements or if fraud could occur
What does Sarbanes Oxley Section 906 Address?
Section 906 addresses criminal penalties for certifying a misleading or fraudulent report
Under Sarbanes Oxley 906 penalties are:
- Up to $5 Million in fines
- Up to 20 years in jail
Other sections of SOX provide additional authority to regulatory bodies and courts relating to fines or imprisonment for matters involving corporate fraud
What does Sarbanes Oxley Section 302 Address?
Sarbanes Oxley Section 302 addresses all financial information disclosed to investors including MD&A in the 10Q and 10K.
Under SOX Section 302, CEO and CFO must:
- Certify quarter and annual financial statements and other published financial information are fairly presented; no untrue facts or omissions
- Establish and maintain disclosure controls and procedures as of period end and for disclosing material changes in internal control
- Disclose to auditors and Audit Committee if control deficiencies, material weaknesses, or fraud exist
Sarbanes Oxley Section 404 Transaction Assessment Training
Who is targeted for this Sarbanes Oxley training?
Individuals who will conduct Sox 404 internal control assessments
Sector / Corporate Function subject matter experts
- Former Financial or Systems Audit Experience
- Public Accounting experience
- Internal Audit experience
- IT General Controls experience
What are our objectives?
- Provide Overview of Sarbanes Oxley Legislation and update on recently published S-Ox 404 Audit Standard
- Communicate Our Company Plan to Address Sarbanes Oxley, Section 404
- Provide awareness training in Assessing Key Process Controls using the Sox 404 Audit Standard