Section 404 of the Sarbanes-Oxley (Sarbox) Law was established to ensure responsible, adequate, and effective management and internal control systems that relate to financial reports. Compliance with Section 404 has been costly to most filers due to required internal processes, external auditing fees, and third-party assistance expense. While larger companies had the resources to comply quickly, smaller companies have found it difficult to do the same due to the relatively high costs. But there’s hope – some companies have discovered effective ways to minimize the costs associated with 404 compliance. The Knowledge Group has assembled a panel of cost cutting experts who will help your firm learn ways to conduct your audits in a cost effective manner.
If you want to know more about cost effective compliance strategies and significant savings, reserve your place in The Knowledge Group’s LIVE Webcast on how to minimize 404 audit fees. The event will feature speakers and experts who've had vast experience in strategies for cost effective 404 compliance. Advanced registration is recommended as space is limited for this webcast. Click the “Register” button below today to avail of the advanced registration discount.
Course Level: Intermediate
Prerequisite: None
Method Of Presentation: Group-Based-Internet
Developer: The Knowledge Group, LLC
Recommended CLE/CPE Hours: 2.0
Important Note: Your State Bar or Accounting Board will make the final determination with respect to continuing education credit. If you are applying for CLE credit in Texas you must register 20 days before the event date or you will not be able to obtain CLE credit.
Advance Preparation: Print and review course materials
Course Code: 103948
Amanda Engstrom
Chief of Staff & Senior Vice President, Center for Capital Markets Competitiveness
Sam Guzman
Senior Manager, National Audit & Assurance, Former Assistant Chief Auditor, Public Company Accounting Oversight Board (PCAOB)
William W. Levi
Financial Advisory & Risk Management Solutions
Steven L. Siemborski
Partner, Regional Advisory Services Leader, National Solution Leader Governance Risk and Compliance
Harold I. Zeidman
Partner, Department of Professional Practice - Audit and Advisory
Amanda Engstrom, Chief of Staff & Senior Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce
- Before the end of June the Supreme Court is expected to issue a decision in the case of Free Enterprise Fund v. Public Company Accounting Oversight Board (“PCAOB”).
- Sarbanes-Oxley (“SOX”) created the PCAOB to regulate the audit profession. Under SOX, PCAOB members are appointed by the Securities and Exchange Commission (“SEC”).
- The plaintiffs in the lawsuit contend that the method of appointment for PCAOB members violates the appointments clause of the Constitution. It is the position of the plaintiffs that the Constitution requires the PCAOB members to be appointed by the President, subject to confirmation by the Senate.
- The Supreme Court has never issued a decision on the appointments clause and this is a case of first impression.
- At a minimum, if the PCAOB were to lose this case, the PCAOB would be considered to be improperly constituted and its standards and work placed in jeopardy. This will cause uncertainty within financial reporting policy possibly causing loses for both investors and businesses. Without oversight of auditing, the potential for unscrupulous practices may also increase.
- SOX lacks what is known as a severability clause. A severability clause is normally common in legislation. With a severability clause, a law which has a portion thereof declared unconstitutional, the offending section is jettisoned, but the rest of the law remains in effect. Without a severability clause, if one section of the law is declared unconstitutional, then the entire law may be unconstitutional.
- Therefore, at a maximum, if the PCAOB were to lose the case, the possibility exists that all of SOX will be declared unconstitutional. This will have ramifications throughout financial policy, internal controls, governance and executive compensation.
Sam Guzman, Senior Manager, National Audit & Assurance, Former Assistant Chief Auditor, Public Company Accounting Oversight Board (PCAOB), Reznick Group, P.C.
- Company’s should talk with their auditor’s early in the process to maximize efficiency and minimize costs.
- Discuss with auditor’s what areas they can possibly “use the work of others” and ensure the auditors are comfortable that the person performing the work is competent and objective.
- Discuss sample sizes and possibly sampling methodology with auditor’s.
- Start testing as early as possible in order to allow time to remediate any deficiencies prior to year end.
SEGMENT 3:
William W. Levi, Financial Advisory & Risk Management Solutions, W. Levi & Associates, LLC
- Re-engineering control frameworks: Greater reliance on “automated” and “entity” controls will provide efficiencies and reduce the cost of Section 404 compliance.
- Continuous Controls monitoring: Reduce the cost of Section 404 compliance while improving financial governance.
- Breakdown the Silos: Compliance management will reduce the cost and complexity of meeting the requirements of multiple regulations.
- How Smaller Public Companies can implement a efficient cost effective Section 404 compliance program.
Steven L. Siemborski,
Partner, Regional Advisory Services Leader,
National Solution Leader Governance Risk and Compliance,
Grant Thornton LLP
- Preventive Controls VS. Protective Controls
- Sox Efforts Into Grc And Erm And Erm Light
- Current Environment – Greater Reliance On Various Service Providers
Harold I. Zeidman, Partner, Department of Professional Practice - Audit and Advisory, KPMG LLP
- Improving IT environment and governance that allows a greater reliance on “system” controls thus
reducing reliance on “manual” controls (which typically are more time-intensive to test and
maintain)
- Improving the level of precision of monitoring-type control activities (such that they can prevent/detect
a misstatement in the place of one or several transactional controls)
- Effectively calibrating ongoing and separate evaluations to maximize efficiency and effectiveness
- Reassess the control portfolio to ensure only key controls are selected for testing
- Reassess the control portfolio to ensure that testing isn’t too weighted towards lower risk financial
statement accounts and assertions and that the type of testing is appropriately calibrated to the risk
associated with the control
- Determine if monitoring-type controls at “sub-group” or headquarters level can reduce the collective
amount of testing at lower risk locations in a multi-location environment
- Lack of an internal audit function doesn’t necessary preclude the external auditor from relying on the
results of work performed by management, especially in lower-risk processes
- “Flatten out” the timeline for testing internal controls; perform testing at earlier interim periods and
consider the level and extent of testing necessary to rollforward the conclusion to year-end
- Migrate legacy computing systems to common platforms in a multi-location environment to
potentially reduce the extent of IT general controls testing
- Consolidate routine processes into shared-service type functions such that the testing of one
control activity at the shared-service center could satisfy a control objective for multiple locations
- Standardize accounting and reporting policies in a multi-location environment in processes where
standardization makes sense. This could help to create testing efficiencies for management and
the external auditors (i.e., a common audit program for multiple locations)
- Hold planning meetings each year with external auditors; find out where bottlenecks and
inefficiencies occur
- Work with external auditors to increase their use of the work of management and internal audit;
think about minimizing the total cost of SOX 404 compliance, not just either internal (404a) or
external auditor (404b) effort
- Exercise the same level of care when evaluating deficiencies as external auditors; evaluations
should be carefully documented using an established framework; this documentation should not
be outsourced to the external auditor. Maintaining contemporaneous documentation in a core
repository of processes, key controls, and related deficiencies (and the evaluation thereof) may
reduce auditor effort
- CPAs
- CEOs
- CIOs
- Finance Executives
- Controllers and Treasurers
- Internal Auditors & Financial Reporting
- Sarbanes-Oxley Consultants
- Regulatory Compliance Officers
- General Counsel
- SOX Compliance Officers
- SOX Executives/Program Managers
- SOX/Tax Attorneys and Accountants
This is a must attend event for anyone interested in knowing the latest updates and developments on the Section 404 of the Sarbanes-Oxley (Sarbox) Law
- New guidance explained by the most qualified key leaders & experts
- Hear directly from key regulators & thought leaders
- Interact directly with panel during Q&A