Internal Controls And The Audit Process

1708 Words7 Pages
During the audit of the financial statements we will be assessing the internal controls in use as mandated by the Sarbanes-Oxley Act of 2002. The act was designed to enhance corporate responsibility as it relates to financial reporting issues. Section 404 covers the internal controls that have been setup by the company. Internal controls are designed to protect the assets of a business from misuse or loss. Internal controls also help the business to streamline processes so that goals can be achieved at the best rate of return from the use of available assets. The remainder of this letter contains an overview of section 404 and other regulations relating to the audit of internal controls and a synopsis of internal control risks that have been identified within Apollo Shoes Inc. We will also describe the relationship between internal controls and the audit process as well as outlining our responsibilities in detecting and reporting fraud.

Section 404 of the act requires all publicly traded companies establish internal controls and procedures for financial reporting. The system of controls must be documented, tested, and maintained to ensure their effectiveness. To comply with section 404 Apollo Shoes Inc. has to submit an annual report that details the four following key elements;

 Statement of responsibility issued by Apollo’s chief executive officer and the chief financial officer for establishing and maintaining adequate internal control structure and procedures

More about Internal Controls And The Audit Process

Get Access