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Specialist Accounting & Risk Management

SOX 404 Compliance (Sarbanes-Oxley Act)

In all companies, large or small, it is the role of management to maintain a system of internal controls so that the financial statements will be reliable.

In the financial auditing of public companies, SOX 404 top–down risk assessment (“TDRA”) is a financial risk assessment performed to comply with Section 404 of the Sarbanes-Oxley Act of 2002 (SOX 404). This is used to determine the scope and required evidence to support management’s testing of its internal controls as well as by external auditors to issue formal opinions on the company’s internal controls.

The SOX 404 assessment ensures that all publicly-traded companies establish secure internal controls for financial reporting. They must document, test, and maintain the procedures for the upmost effectiveness of the company. Registered external auditors must attest to the accuracy of the company management’s assertion that internal accounting controls are in place, operational, and effective.

There are 3 steps to completing the evaluation of the effectiveness of internal controls:

  1. Identifying financial reporting risks and the controls that address them
  2. Confirming that the controls work in practice
  3. Reporting conclusions on overall effectiveness and deficiencies

Your company should ensure that employees understand what they need to do to properly prepare financial reports, and understand the information they need to have them done correctly. LehmanBrown’s expertise in SOX 404 compliance can enable you to ensure full complicity for your audit process with the Sarbanes-Oxley Act 404.

To learn more about SOX 404 compliance or to make an enquiry, please contact us at enquiries@lehmanbrown.com.