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: SERVICES: Sarbanes-Oxley Compliance Services: Phase II - Documentation
Phase II: Documentation
The documentation produced in the Section 404 process forms the basis
and support for management’s evaluation of internal control over
financial reporting. Further, the SEC's final rules on Section 404 indicate
that it is a company's responsibility to document internal control and
that developing and maintaining such documentation is inherent to effective
internal control.
We will perform the following steps in Phase II of our approach:
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Determine scope of documentation - together, we determine which accounts
and disclosures will be evaluated and which locations should be included
in the scope of your internal control documentation.
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We will meet with your external auditor for guidance on approach.
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Develop process documentation - document the flow of transactions
for significant accounts and disclosures to determine where material
misstatements, due to error or fraud, could occur. Identify the control
activities within these processes. This includes narratives and flowcharts.
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Develop control documentation - document controls within each of
the five components of internal control and specifically address company-level
controls, anti-fraud programs and evaluation of the audit committee's
effectiveness.
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Assess the design of controls - evaluate whether the company's controls
are adequately designed to mitigate the risk of material misstatement.
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