StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

SOX Section 404 Consulting - Essay Example

Cite this document
Summary
Section 404 is the key aspect of SOX; it highly demands the external auditors and management of a company to emphasis on reporting of financial statements. This process turns out to be the most costly processes among all requirements laid down by the legislation for companies…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER91.8% of users find it useful
SOX Section 404 Consulting
Read Text Preview

Extract of sample "SOX Section 404 Consulting"

Download file to see previous pages

Section 404 is the key aspect of SOX; it highly demands the external auditors and management of a company to emphasis on reporting of financial statements. This process turns out to be the most costly processes among all requirements laid down by the legislation for companies. This is because testing and documenting of paramount automated and manual final financial statements is highly sensitive. Under this section, the Act requires management to avail an “internal control report” together with annual Exchange Act report.

The report encompasses the role of management in putting down the procedure and procedures of the internal control system. This is because their efficiency dictates the adequacy of the financial statements (Ramos, 2008, p 23). This section contains an assessment of the company after the financial year, including the establishment and maintenance of the control system. The section also includes the level of effectiveness of the control system is reporting the audit scope. The management has to adopt the internal control systems described in international auditing standards.

In reference to Apollo Shoes Company, the cost elevation, guidance, and practice is taking place. There is a compilation of approvals made by the Public Company Accounting Oversight Board. All this activities ensure there is a fair representation of the shareholders by the management. Significant regulations and guidelines regarding audits of internal control It is evident that the internal controls of Apollo Shoes are above average. As a result, there are few recommendations needed to meet the set standards.

The company should ensure that all employees respect the internal controls in order to meet the set standards. It is noticeable that many employees hardly follow the set procedure to secure the assets of the company. We also propose that the relationship between the internal auditors and management is not healthy; therefore, the audit committee should have a sitting to resolve this arising issue. Through this, company is going to enhance auditors’ independence (Ramos, 2008, p. 23). Risks identified within the company In Apollo Shoes Company, there are few areas open to risk.

This is a result of negligence on the employees. After a detailed evaluation of the company, it is evident that Apollo Shoes is a company that has identified itself in terms of quality control systems. This is a complement that goes to the internal auditors. However, there are gaps which may lead to material misrepresentation in the financial statements. One of the key areas is the procedure followed in completing a transaction. For a company to prevent “ghost transactions,” there should be many signatories between initiation and completion of a transaction.

An ideal example is when a potential buyer places an order; the party receiving the notice should be different from that processing the order. The party processing the order should be different from the party arranging the dispatch, and lastly the party delivering goods should be different from the other parties. In reference to the audit report, confidential accounts have a weak security system. The system is using out of date technology, and this may lead to unhealthy competition.

The company should adopt new technology to enhance secrecy, and protection of ideas. Examples of these technologies include biometric security systems, and the recent business solution such as the SAP models. These solutions make use of integrated IT knowledge that is free from hacking and other mal-handling. Other areas that need concentration are stock counting, depreciation and appreciation calculation, and basis behind activities such as bonuses, retirement pension, writing off bad-debts, and disposal of assets, among others.

Internal controls and the audit process Internal controls determine the

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“SOX Section 404 Consulting Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.org/finance-accounting/1395149-week
(SOX Section 404 Consulting Essay Example | Topics and Well Written Essays - 750 Words)
https://studentshare.org/finance-accounting/1395149-week.
“SOX Section 404 Consulting Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/finance-accounting/1395149-week.
  • Cited: 0 times

CHECK THESE SAMPLES OF SOX Section 404 Consulting

Sarbanes-Oxley Act

Issue 4 (Financial Disclosure) In accordance to 404 sections of SOX public auditing firms need to certify internal control process regarding accounting system of the company and also need to maintain auditing process with a minimum one financial expert.... Issue-2 (Independence of Auditor) This section of SOX deals with regulatory issues for an auditing firm.... Issue-3 (Corporate Responsibility) This section provides an idea of the structural design of the auditing committee....
7 Pages (1750 words) Assignment

Sarbanes Oxley and its Influence on the Finance and Information Technology

nbsp;… Sarbanes Oxley Act (sox) is considered to be a successful Act by most of the Audit firms due to the assurance it provides through financial statements by fairly presenting the condition of a business and requires executive management to assume personal responsibility for their accuracy and completeness.... (Klimko, May 2004)The second reason is that sox seeks to improve investor confidence by tightening government regulation of the accounting, reporting, and corporate governance practices of public companies....
22 Pages (5500 words) Coursework

Compliance With Sarbanes Oxley Act for Companies in United States

The paper “Compliance with Sarbanes Oxley Act for companies in United States”  will take a closer look at the Sarbanes Oxley Act (sox) of 2002 that was passed in United States following Enron, Tyco and other corporate scandals and will provide detailed analytical study of the Act itself.... hellip; The key research question is to analyze the clauses of sox act and its implementation problems at US companies.... This will be carried out to identify if there are practical limitations to implement the Act as claimed by several US companies and will perform an evaluation of various clauses and terms of the sox Act....
8 Pages (2000 words) Essay

The Sarbanes-Oxley Act of 2004: Boon or Bane to the US Economy

The Act is organized into 11 titles and most important of these are 302, 401, 404, 409, 802, and 906.... However, with some exceptions, it ignores the broader obligations of the corporate directors or officers to their corporations or standards applicable to the performance of the companies (Nelson, 2008) Sarbanes-Oxley Act of 2002, also called Sarbanes Oxley or simply sox, relating to corporate governance and internal control over financial reporting, was proposed in the Congress, jointly by Senator Paul Sarbanes and Representative Michael G....
7 Pages (1750 words) Case Study

The Cost of Complying with Sarbanes-Oxley Act

section 404 is the most important section of Title IV of the “Sarbanes-Oxley Act” and has been the most costly part of implementing the latest bill.... Under section 404, board of a company is needed to generate a report on “internal control” that confirms the… (Coffee, 2006).... “Sarbanes-Oxley Act”, otherwise known as “sox”, is the America's federal law which sets latest or improved standards for all U.... In 2002, sox was introduced in retort to frequent occurrence of major accounting and corporate scandals, including scandals such as Tyco International and Enron....
6 Pages (1500 words) Research Paper

Impact on Business and Society

hellip; Based on the foregoing policy analysis, sox has proved to be good legislation as a response to corporate misconduct.... sox will continue to be debated for some more years to come.... However, sox will evolve and remain.... It is argued that sox is an essential policy tool to realize these objectives.... sox came into force from January 23, 2002.... sox is to be enforced by three authoritative bodies....
10 Pages (2500 words) Term Paper

Ethics and Law in Business and Society

Before the introduction of SOX, auditing firms which are noted as watchdogs for the investors did not perform auditing or any consulting... The key provisions that this paper will analyze their implementation include Sarbanes-Oxley Sections 302, 303, 401, 404, 802, 906 and 1106.... Sarbanes- Oxley Act of 2002 (sox) which is also referred to as Public Company Accounting Reform and Investor Protection Act, refers to the US federal law that aims at enhancing performance and standards for all United States public companies boards, accounting firms and… The act, which was approved by the house in 2002 after 423votes were in favor and President George Bush signed it into law, aims at curbing the corporate and accounting standards that were experienced in US for example the Worldcom and Enron....
14 Pages (3500 words) Research Paper

The Impact of Sarbanes-Oxley Act

Nonetheless, Bisoux (2005) asserts that sox has forced many corporate executives to abandon the “what-you-don't-know-can't-hurt-you approach at managerial levels to an honesty-is-the-best-policy” (p.... The author focuses on Sarbanes-Oxley Act of 2002 which the main objective was to restore investor confidence as large corporations were exposed as having been operating using fraudulent accounting methods to skim profits or hide bad losses within their businesses… The Sarbanes-Oxley Act was the consequential integration of two parallel financial reform bills advanced by Sen....
17 Pages (4250 words) Term Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us