DO YOUR INTERNAL CONTROLS COMPLY? 

Section 404 of the Sarbanes-Oxley Act of 2002 requires management assessment of internal controls within the annual reports of public companies.

This brief, but far-reaching section requires a report stating management's responsibility for internal controls, procedures for financial reporting and a current assessment of their effectiveness. In addition, your external auditor must attest to your evaluation.

For most companies, compliance with Section 404 presents a challenge in terms of time and resources. You will need to:

• Understand your external auditor's attestation requirements and structure your report and processes accordingly

• Document and test your controls

• Identify, restructure, retest and document controls for any material weaknesses

• Gain self-sufficiency to maintain processes

“Can't I just state that my controls are sufficient?”

This kind of statement may be viewed as a non-response and would likely not be acceptable to your external auditor. The determination of “effective” controls must be examined with Section 404 in mind. Simply presenting standard documentation every year will be insufficient.

Management should actively test internal controls before asserting to their effectiveness.

Are they documented so that management can easily assert to their effectiveness?

Are they structured so that management can test controls on their own?

Do they meet your external auditor's requirements?

Are they structured to allow your external auditor to easily test them?

We can assist your organization to meet the requirements imposed by Section 404 for this year's reporting. With a focus on process, your people and your organization and the right tools for the job, we:

• Assess and improve internal control structure and processes

• Help reduce the chance of material weaknesses

• Positively impact the timeline and costs for management and external auditor

testing and assertions

• Document your structure and processes

• Assist in management reporting and testing

• Assist your organization to gain self-sufficiency in meeting 404 requirements on an ongoing basis

Our methodology for addressing Section 404 requirements quickly and expertly, yet inexpensively, addresses these areas:

• Internal controls structure and process

• Assisting Management with reporting and testing

• Ongoing self-sufficiency and increased internal control maturity