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Audit Committees Have Role in Section 404 IC Regime

Hamilton James | July 8, 2003

As nearly everyone knows by now, one of the most significant provisions of Sarbanes-Oxley is "Management Assessment Of Internal Controls," known to most firms as "SOX 404."

Section 404 requires that annual reports be accompanied by a statement clarifying that company management is responsible for creating and maintaining adequate internal controls, and that management has assessed the the effectiveness of those controls.

And, of course, the company's auditor must subsequently attest to the IC assessment.


The SEC has implemented SOX 404 by requiring management's annual internal control report to contain, among other things, two key components:

  1. A statement of management's responsibility for establishing and maintaining adequate internal control over corporate financial reporting, and
  2. A statement identifying the framework used by management to...
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