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Getting Control Over Internal Control Rules

Colleen Cunningham | May 17, 2005

The March 16 deadline for public companies to complete an audit of their internal controls over financial reporting under the requirements of Sarbanes-Oxley Section 404 has come and gone. Now that we have gone through the first run of this mammoth compliance effort, it’s time to review what we have learned and identify ways to improve the annual certification process going forward.

To comply with Section 404 and provide management and auditors with data to support certification, companies had to ensure the reliability of their accounting systems by documenting nearly everything about their assets, from the way they manage their inventories, to how they bill their customers, to how they handle payroll. While this was a useful exercise in many respects, it also cost much more than originally projected and forced many companies to delay more strategic IT and personnel investments.

The SEC originally estimated Section 404 would cost companies...

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