Warren SM_Ch-1.08_final - CHAPTER 8 EXERCISES Ex 81 Section...

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CHAPTER 8 EXERCISES Ex. 8–1 Section 404 requires management’s internal control report to: (1) state the responsibility of management for establishing and main- taining an adequate internal control structure and procedures for finan- cial reporting; and (2) contain an assessment, as of the end of the issuer’s fiscal year, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting. The complete AICPA summary of Section 404 of Sarbanes-Oxley is as follows: Section 404: Management Assessment of Internal Controls. Requires each annual report of an issuer to contain an “internal control re- port,” which shall: (1) state the responsibility of management for establishing and main- taining an adequate internal control structure and procedures for finan- cial reporting; and (2) contain an assessment, as of the end of the issuer’s fiscal year, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting. Each issuer’s auditor shall attest to, and report on, the assessment made by the management of the issuer. An attestation made under this section shall be in accordance with standards for attestation engagements issued or adop- ted by the Board. An attestation engagement shall not be the subject of a sep- arate engagement. The language in the report of the Committee which accompanies the bill to explain the legislative intent states, “…the Committee does not intend that the auditor’s evaluation be the subject of a separate engagement or the basis for increased charges or fees.”
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