Question

Discuss legislation (pay special attention to the Sarbanes-Oxley Act) and other requirements associated with management's role in providing accurate information on internal controls and financial reporting. Do you agree or disagree with these regulations regarding management's role in financial reporting and internal controls, why or why not?

Answer 1

Sarbanes Oxley Act's section 404 implementation has brought management's role on reporting about internal controls in light.

The annual report on internal control must contain:

1. A statement from the management regarding adequacy and responsibility of the establishment of internal controls.

2. Management's assessment of internal controls over financial reporting process.

3. A statement identifying the framework used by the management in evaluating conduct of internal controls.

4. A statement of the public accounting firm that has audited the financial reports.

Management's report must affirmatively state wether internal controls over financial reporting is effective.

Negative sentence is not permitted.

I agree with the role of management because they have the fiduciary duty to protect stakeholder's money and to trust them it is necessary that they should abide by all the stricter laws and regulations to avoid white collar crimes.