Internal Control over Financial Reporting

This practice note discusses internal control over financial reporting. Section 404(a) (15 USCS § 7262) of the Sarbanes-Oxley Act of 2002 (SOX) requires the U.S. Securities and Exchange Commission (SEC) to prescribe rules providing that each annual report required under the Securities Exchange Act of 1934, as amended (Exchange Act) shall include a control report affirming the responsibility of management for establishing and maintaining an adequate internal control structure for financial reporting and containing management’s assessment at each fiscal year end of the effectiveness of the company’s internal control structure and procedures for financial reporting. Section 404(b) of SOX also requires that the company’s auditors attest, as part of the annual auditor’s report, on management’s assessment of the internal control over financial reporting.