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Sarbanes-Oxley News & Developments
Control Freaks? SEC Issues Section 404 RulesInternal controls must pass by 2004; one wrinkle: auditors must attest the company attestation.
> > The clock is ticking, but a bit more slowly than expected.
Under final rules enacted by the SEC, most senior managers will have to report on and certify their companies internal financial controls starting with fiscal years ending on or after June 15, 2004.
Section 404 of SOX requires a company annual report to contain statement of management responsibility to set up and maintain adequate internal controls. Senior managers must also supply assessments for financial reporting as of the end of the most recent fiscal year of the company.
Section 404 of SOX also requires independent auditors to attest to and report on management controls assessmenst in line with standards to be set up by the Public Company Accounting Oversight Board (PCAOB). PCAOB has yet to develop internal-control standards for auditors.
Annual internal control reports by management must contain: 1) a statement of management responsibility for establishing and maintaining adequate internal control over financial reporting, 2) a statement to indentify management framework for evaluating the effectiveness of internal control, 3) management assessment of the effectiveness of internal control as of the end of the most recent fiscal year and 4) a statement that the company auditor has issued an attestation report on management assessment.
The SEC approved the new rules by a 5-0 vote.
Source: CFO article
Published:2003-07-14
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