SOX 404: Mastering the ICFR Evaluation Process

One day — 8 CPE credits

Learn how to plan and complete the evaluation of Internal Control Over Financial Reporting required by Section 404 of the Sarbanes-Oxley Act.

In this workshop you will interact with the instructor to:

• Review the SEC’s Management Guidance and PCAOB’s Audit Standard 5

• Understand how to use the COSO framework in the evaluation process, including recent guidance

• Learn how entity level controls impact the process

• Learn how to optimize your control effectiveness testing

• Understand how to re-evaluate scoping and testing decisions

• Review when to use walk-throughs and related procedures

• Understand how to evaluate control problems and what is a material weakness

• Learn to challenge and review to eliminate unnecessary work

• Understand what you need to document

• Understand what you need to report

Agenda

8:00-8:30 a.m. - Registration/Continental Breakfast

8:30-8:45 a.m. - Workshop Overview – The State of the 404 Process

• Workshop schedule, administrative matters and introductions

• Overview areas for improvement

8:45-9:15 a.m. - The SOX Process Today

• Structure of the SOX process as it should be

• SEC management guidance process

• PCAOB Audit Standard 5 process

• How does the guidance compare to your process?

9:15-11:00 a.m. - The SEC’s New Guidance for Management

• Two basic principles

• Structure of the process

• The three levels of entity level controls

• Where can entity level controls be used to reduce process level testing

• Identifying financial reporting risks

• What is a material weakness?

• Issues in scoping

• Identifying controls that address financial reporting risks

• Design effectiveness evaluation

• Operating effectiveness evaluation

11:00-Noon - The PCAOB’s New Audit Standard 5

• Overview of the auditor’s SOX 404 process

• “Top-down” now required by AS 5

• Entity level control issues

• Starting with the financial statements

• The new definition of significant account

• Is process documentation required?

• Testing issues

• Refining sample size decisions

• Maximizing efficiency of testing by finding opportunities to combine walkthroughs, design effectiveness and operating effectiveness testing

• Maximizing efficiency in testing controls with multiple objective tests

• Making more efficient sample size decisions

• Timing your testing to make remediation efforts on a timely basis

Noon-1:00 p.m.  - Lunch

1:00-2:00 p.m.  - Dealing Effectively with IT Issues

• Determining which IT general controls to document and test

• Issues in hard-to-obtain SAS 70 service organization reports

• Effective documentation of IT application controls in process documentation

2:00-3:00 p.m.  - SOX as it Exists versus the New Guidance

• Adjusting testing to identify only material weaknesses

• Operational control issues

• Entity level controls – when could they be enough?

• Could you reduce some process level documentation?

3:00-4:00 p.m.  - Summary of Areas for Change

• Focus on material weakness issues

• Eliminating operational control issues

• Identifying financial reporting risks

• Using entity level controls

• Reducing “significant accounts”

• Testing effectively

• Self assessment and other testing regimens

4:00-4:15 p.m. - Material Weakness and Other Reporting Issues

• The large CPA firm's "Framework" document for analyzing control deficiencies – adapting for the new definitions

• Reporting the remediation of material weaknesses and AS 4

• When must changes in internal control be reported in Form 10-Q and 10-K?

• The requirement for "robust" disclosure of material weaknesses

• Tips for writing a clearer, more effective report

4:15-4:30 p.m. - Questions and Answers

• Getting benefit and building lasting value from establishing and improving internal control

• Should you use the COSO's Enterprise Risk Management Framework?

• Benchmarking, what cost information is available? Averages per company?

• What is the market impact of reporting material weaknesses?

• Learning curves - getting better each time

• Avoiding mistakes from earlier years

• COSO's new "Implementing the COSO Control Framework in Smaller Businesses"

Learning Objective: To provide an understanding of the internal control reporting requirements of Sarbanes-Oxley Section 404.
Delivery Method: Group-Live
Prerequisites/Advance Preparation: SOX 404: The First Time Through, or experience in the 404 process
Program Level: Overview.

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