Question

Please write 250 words please to this question

The difference between Section 302 certification and Section 404 compliance certification of Sarbanes-Oxley Act.

Answer 1

The Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. The Act is designed to oversee the financial reporting landscape for finance professionals. Its purpose is to review legislative audit requirements and to protect investors by improving the accuracy and reliability of corporate disclosures.

Section 302(Certification): It is to ensure that all the material information is disclosed by an organisation in the reports. Controls must be put in place to ensure that all the material information is disclosed including any significant changes to processes or the controls. Stress is on Disclosure of material info and controls to ensure the disclosure.

Section 404(Compliance certification): final audit report shall have a report of management's assessment of internal control over financial reporting. Stress is on management's certification that appropriate internal controls are in place that can effectively detect or prevent errors or fraud that could result in material misstatements in the financial statements.

So in short the main difference between Sec 302 and 404 of the sarbanes oxley Act is sec 302 stress on disclosure controls, where as sec 404 stress on internal controls.