Internal Controls

As reported in Compliance Week over the past year, most estimates of costs associated with the internal control provisions of Sarbanes-Oxley have hovered around 0.001 percent of revenue, or “one million in expenses per billion of revenue.” A recent survey by Financial Executives International has confirmed that estimate, keeping the number in the general ballpark […]

One of the most common mistakes we still see in practice is too narrow an interpretation of what is covered by Section 302 and 404 control effectiveness representations. Many companies appear to be under the mistaken impression that these representations relate only to the accounting processes that feed disclosures in balance sheets and income statements. […]

According to a review of regulatory filings during the first month of 2004, 23 companies disclosed material weaknesses or significant deficiencies in internal controls. That number is nearly double the 14 similar disclosures made during the prior month of December 2003. Eleven companies made such disclosures in November 2003. (See box at right for prior […]

If Section 404 is requiring more effort than predicted, you’re not alone. Nearly three-quarters of Sarbanes-Oxley project leaders recently acknowledged that they’ve seen an increase in the level of effort required to comply with internal control provisions. That’s according to a survey conducted by PricewaterhouseCoopers at a Sarbanes-Oxley Section 404 Compliance conference last week. According […]

My eldest daughter came home from university for the holidays complaining loudly about her last business exam in management sciences. She claimed the exam had been ridiculously hard and didn’t think she had done very well. On the bright side however, she thought most of her classmates had also “tanked” the exam. The professor would […]

Every month, Compliance Week staffers scour SEC filings for disclosures of material weaknesses or “significant deficiencies” in internal controls. According to regulatory filings, 14 companies disclosed such weaknesses during the month of December, representing a 27 percent increase from the 11 firms who reported the same during November. The previous November survey is available in […]

As public company executives surely know by now, Sections 302 and 404 of SOX require public companies to establish, implement and evaluate their internal controls for purposes of financial statement reporting and operational integrity. Outside auditors must attest to management’s assessment. In doing so, both parties would be — in theory — demonstrating to shareholders […]

Instances of fraud have risen 13 percent since 1998, but companies are taking more proactive measures to counter fraud than ever before. According to KPMG’s Fraud Survey 2003, company management is taking a more active approach in detecting fraud through internal controls and internal audits (see chart). In fact, over 75 percent of the organizations […]