ACCT 407 - Chapter 5
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Report on the company's internal control over financial reporting (Section 404)
Annual Report Criteria (another note card)
Control testing required for public companies but not for private companies or not-for-profit organizations/companies
2. A statement identifying the framework (usually COSO) management uses to evaluate the effectiveness of the company's internal control.
3. A statement providing management's assessment of the effectiveness of the company's internal control
Effectiveness and efficiency of operations (MGMT objectives-Operations Category)
compliance with applicable laws and regulations (MGMT objectives-Compliance Category)
2. Information and Communication
4. Control Procedures
5. Risk Assessment
Foundation for all other components of internal control. Provides Discipline and structure. (Tone of Upper Management sets the Tone for the Entire Company)
Board of Directors (oversight of FS and Controls)
Management's Philosophy and Operating Style
Financial Reporting Competencies (individuals are competent financial reporting and related oversight roles)
Authority and responsibility (Levels of authority)
2. Use a top-down approach to gain an understanding (identify significant accounts, locations, assertions) (same as 1 and 2 for nonpublic)
3. Testing internal control effectiveness (design and operating effectiveness) (same as 3 for nonpublic)
4. Evaluating control deficiencies (deficiencies, significant deficiencies, and material weaknesses)
5. Wrapping up; Forming an opinion on the effectiveness of internal control over financial reporting