Question

The Sarbanes -Oxley Act of 2002 contains one key provision , Section 404. Describe the purpose of this section and explain what must happen at the end of the fiscal year.

Answer 1

According to the section 404 of the Sarbane Oxley Act, the management should be accountable for the internal control of the enterprise and shall evaluate the effectiveness and adequacy of such internal controls. Further they must identify if any deficiencies are found during evaluation and report them along with the statement of assuming the responsibility to implement and assess the controls in the annual report. The enterprise's external auditor shall atest the assertion so made by the management.

Further an assessment of the effectiveness of internal controls at end of the most recent fiscal year is to be made as per Section 13 or 15(d) of Securities Exchange Act, 1934 in conjunction with 404 of this act.