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College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756

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BuyFindarrow_forward

College Accounting, Chapters 1-27

23rd Edition
HEINTZ + 1 other
ISBN: 9781337794756
Textbook Problem

What does Section 404 of the Sarbanes-Oxley Act require?

To determine

State the requirement of the Sarbanes-Oxley Act under section 404.

Explanation

Sarbanes-Oxley Act of 2002:

  • The Sarbanes-Oxley Act (also known as SOX) was introduced in 2002 to restore the investors’ interest in public companies. This act established accounting regulations and norms that most large businesses have to follow.
  • This act requires company CEOs and CFOs to assume responsibility for the financial statements and disclosures. They also need to assume responsibility for establishing an adequate internal control structure and procedure for financial reporting.

The requirement of the Sarbanes-Oxley Act under section 404 is explained as follows:

Section 404 of the Sarbanes Oxley Act (SOX) requires the management of the publicly traded companies to have an effective internal control over the financial reporting. It requires auditors of the publicly traded companies to attest and report on the management assessment of its internal control.

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