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The Sarbanes-Oxley Act of 2002 has created challenges and opportunities for publicly traded companies, changing the way they do business. Many private and not-for-profit companies are also looking at Section 404 of Sarbanes-Oxley to develop procedures that are more effective and efficient.
Enacted to restore public confidence and trust in our nation's corporate sector, the Act demands greater accountability for financial management and reporting practices for companies registered with the Securities and Exchange Commission (SEC). And while the Act does not directly apply to nonpublic companies or not-for-profits, such organizations also are adopting many of 404's provisions.
The Act charges management with the responsibility for annually assessing the design and operating effectiveness of internal control over financial reporting and requires external auditors to annually audit and issue a report on the effectiveness of the company's internal controls.
Decosimo has developed an approach to Section 404 compliance that assists management with initial assessments, specific phases, end-of-process reviews or outsourcing staff.
We also can take a lead role in helping management meet Section 404 requirements. Our four-phased approach covers planning, training, documenting and testing.
Impact on Nonpublic Companies
Many nonpublic organizations and not-for-profits are looking at Section 404-related issues, or internal audit outsourcing, as opportunities to improve business effectiveness and efficiency.
These entities are proactively evaluating their corporate governance environment and considering adopting 404 rules that are not otherwise required. Decosimo can assist not-for-profit entities in understanding the implications and costs of complying with Sarbanes-Oxley.
Decosimo is an independent member firm of Moore Stephens North America, which is itself a regional member of Moore Stephens International Limited (MSIL). All the firms in MSIL are independent entities, owned and managed in each location. Their membership in, or association with, Moore Stephens International Limited should not be construed as constituting or implying any partnership between them.