Sarbanes-Oxley SOX 404 – What would cause internal controls to be ineffective?
- Controls are ineffective if one material weakness is identified by management and/or by Accounting Company as of the end of the fiscal year
- Controls may be ineffective if a number of significant control deficiencies exist which in aggregate could lead to a material misstatement of financial statements
- Examples of items potentially leading to a material weakness:
- Inadequate documentation to support management’s assessment
- Inadequate internal controls over financial reporting
- The decision on what items are a material weaknesses will be determined by Company’s Disclosure Committee; Management; Accounting Firm; and the Audit Committee