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How to Comply with Sarbanes-Oxley Section 404

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How to Comply with Sarbanes-Oxley Section 404

Assessing the Effectiveness of Internal Control

Wiley,

15 min read
10 take-aways
Text available

What's inside?

Understanding Sarbanes-Oxley may take some technical probing – but that sure beats what happens if you don`t understand.

Editorial Rating

6

Qualities

  • Applicable

Recommendation

Author Michael Ramos provides comprehensive, meticulously detailed information. He offers a detailed guide to evaluating your company’s internal controls. He addresses Sarbanes-Oxley Section 404 legislation, as well as associated Security and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) regulatory requirements, even covering the COSO and COBIT reporting frameworks. While expert and exhaustive, the book suffers from a dense, academic writing style. getAbstract.com suggests it to those who seek a very detailed compliance overview and who already have experience with understanding auditing standards and related governmental regulations.

Summary

The Stakes in SOX

Sarbanes-Oxley and associated Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) regulations require managers to give an account of their organization’s financial reporting controls, including disclosure and internal measures. Disclosure controls involve information from your financial records, however, some matters that are part of your financial records are not part of internal control. For example, an organization may have to disclose a new strategic alliance or its CEO’s pay, but these have nothing to do with its internal controls.

The most taxing element of Sarbanes-Oxley is its emphasis on internal controls that ensure the reporting of accurate information about performance. Auditors review these controls, so SOX created PCAOB, a private sector, non-profit corporation that oversees public company auditors. These auditors must judge whether management’s assessment of an organization’s fiscal controls is adequate. Their examination goes through two phases:

  1. Management assesses and judges the efficacy of internal controls.
  2. Auditors assess internal controls and issue...

About the Author

Michael Ramos, CPA, is a consultant and writer who works with auditing and accounting technical matters. He has written general practice manuals, implementation guides and authoritative AICPA and accounting guides.

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