the Financial Accounting Standards Board issued guidance in June 2009 for the consolidation of a variable interest entity (VIE), which may have significant implications to a reporting enterprise's internal control over financial reporting
and its compliance with SOX Section 404(a).
GAO, under its audit authority, audited SEC's financial statements to determine whether (1) the financial statements are fairly stated, and (2) SEC management maintained effective internal control over financial reporting
. GAO also tested SEC's compliance with selected provisions of significant laws and regulations.
Managers of smaller businesses need to design and implement an effective system of internal control over financial reporting
in a cost-beneficial way.
The SEC release also directs external auditors to express only one opinion on a client's internal control over financial reporting
rather than the current practice of expressing an opinion on both the control system itself as well as management's assessment of the system.
Internal control over financial reporting
plays a significant role in enhancing this reliability.
over the rules surrounding the implementation of section 404 of the Sarbanes-Oxley Act of 2002, the CSA have decided not to proceed with proposed Multilateral Instrument 52-111 Reporting on Internal Control over Financial Reporting
According to Compliance Week, which monitors the reporting of internal control weaknesses, March 2005 had 116 companies disclosing material weaknesses in their internal control over financial reporting
, up from 28 for the same period in 2004.
Now, if the audit partner finds a material error, the controller likely will immediately need to review the company's internal control over financial reporting
and identify a mitigating control.
The new guidance is a supplement to COSO's 1992 guidance, Internal Control--Integrated Framework, illustrating essential internal control over financial reporting
using real-world small company examples.
In response to Section 404, the SEC issued its final rule: Management's Reports on Internal Control over Financial Reporting
and Certification of Disclosure in Exchange Act Periodic Reports, setting forth specific requirements for Management's Reports on Internal Control Over Financial Reporting
* Management's assessment of the effectiveness of the company's internal control over financial reporting
, based on management's year-end evaluation, including the disclosure of any material weakness.
They believe it is critical that all Canadian reporting issuers have sound internal control over financial reporting
. They are continuing to develop the Proposed Instrument and, in doing so, are evaluating whether or not to create something similar to the U.S.