In this lesson, Nick Palazzolo, CPA, tackles the crucial role of management under Sarbanes-Oxley Act (SOX) 2002, emphasizing the specific responsibilities of senior financial officers. He humorously demystifies the requirement of a code of ethics, clarifying its application exclusively to the financial heavyweights rather than to all employees. Nick walks through the necessary disclosures and repercussions if such a code is not adopted, detailing the ethical principles it must endorse. Delving into management's signed representations on financial reporting, Nick explains the personal liability the CEO and CFO assume for the accuracy and completeness of SEC filings. He identifies the key aspects they must affirm, from having read the report to disclosing any deficiencies in internal controls. Nick ensures clarity on who is accountable for establishing and maintaining internal controls, debunking common misconceptions that may arise on the audit exam. Finally, he delineates what is included in the separate report on internal controls, stressing the delineation of roles between management and auditors in asserting the soundness of internal controls, and points out a critical non-inclusion that often becomes a testable point.
Lesson: Management Requirements
In this lesson, Nick Palazzolo, CPA, tackles the crucial role of management under Sarbanes-Oxley Act (SOX) 2002, emphasizing the specific responsibilities of senior financial officers. He humorously demystifies the requirement of a code of ethics, clarifying its application exclusively to the financial heavyweights rather than to all employees. Nick walks through the necessary disclosures and repercussions if such a code is not adopted, detailing the ethical principles it must endorse. Delving into management's signed representations on financial reporting, Nick explains the personal liability the CEO and CFO assume for the accuracy and completeness of SEC filings. He identifies the key aspects they must affirm, from having read the report to disclosing any deficiencies in internal controls. Nick ensures clarity on who is accountable for establishing and maintaining internal controls, debunking common misconceptions that may arise on the audit exam. Finally, he delineates what is included in the separate report on internal controls, stressing the delineation of roles between management and auditors in asserting the soundness of internal controls, and points out a critical non-inclusion that often becomes a testable point.
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