SOX Section 404 Consulting Essay Example | Topics and Well Written Essays - 750 words

SOX Section 404 Consulting - Essay ExampleSection 404 is the key aspect of SOX ithighlydemands the external auditors and counsel of a company toemphasison handleing of pecuniary statements. Thisprocessturns out to be the mostcostlyprocesses among all requirements laid down by thelegislationfor companies. This is because testing and documenting of paramount automated andmanualfinalfinancial statements is highly sensitive. Under this section, the Act requiresmanagementtoavailan internal bindreport together with annual Exchange Act report. The report encompasses theroleofmanagementin putting down theprocedureand procedures of the internal control system. This is because theirefficiencydictates the adequacyof the financial statements (Ramos, 2008, p 23). This section contains anassessmentof the company after the financial year, including theestablishmentand maintenance of the control system. Thesectionalso includes thelevelofeffectivenessof the control system is reporting the audit s cope. The management has to adopt the internal control systems described in international auditing standards. In reference to Apollo Shoes Company, the cost elevation, guidance, and exercisingis taking place. There is acompilationof approvals made by the Public Company Accounting Oversight Board. All this activities ensure there is a plum representation of the sh beholders by the management. Significant regulations and guidelines regarding audits of internal control It isevidentthat the internal controls of Apollo Shoes are above average. As a result, there are few recommendations needed to meet the set standards. The company should ensure that all employeesrespectthe internal controls in order to meet the set standards. It isnoticeablethat many employees hardlyfollowthe setproceduretosecurethe assets of the company. We alsoproposethat the relationship between the internal auditors andmanagementis nothealthy therefore, the audit committee should withdraw a sitting toresolvethis a rising issue. Through this,companyis going to rearauditors independence (Ramos, 2008, p. 23). Risks determine within the company In Apollo Shoes Company, there are few areas open torisk. This is a result of negligence on the employees. After a detailed evaluation of the company, it isevidentthat Apollo Shoes is a company that has identified itself in terms of quality control systems. This is acomplementthat goes to the internal auditors. However, there are gaps which may lead to material misrepresentation in the financial statements. One of the key areas is the procedure followed in completing a transaction. For a company topreventghost transactions, there should be many signatories between installment and completion of a transaction. Anidealexampleis when a potential buyer places an order the party receiving thenoticeshould be different from that bear upon theorder. The party processing theordershould be different from the party arranging thedispatch, andlastlythepartydelivering goodsshould be different from the new(prenominal) parties. In reference to the audit report,confidentialaccounts hold back a weak securitysystem. The system is using out of date technology, and this may lead to unhealthy competition. The company should adopt new technology to enhance secrecy, andprotectionof ideas. Examples of these technologies include biometric security systems, and therecentbusinesssolution such as the SAP models. These solutions make use of integrated ITknowledgethat is free from hacking and other mal-handling. Other areas thatneedconcentration arestockcounting, depreciation andappreciationcalculation, andbasisbehind activities such as bonuses, retirement pension, writing off bad-debts, and disposal of assets, among others. Internal controls and theauditprocess Internal controls determine the