SEC Proposes Rules Under Sarbanes-Oxley on Internal Controls, Financial Experts, Auditor Interference and Codes of Ethics.

Mondaq Business Briefing, November, 2002

Proposed Rules Relating to Internal Control Reports and Evaluations

Overview. Section 404 of the Sarbanes-Oxley Act of 2002 established requirements for issuers to include in their annual reports on Form 10-K an internal controls report that (i) describes management's responsibilities with respect to internal controls procedures and (ii) contains an assessment of the effectiveness of those procedures, and also for auditors to attest to management's assessment. The rules now proposed by the SEC to implement those provisions go beyond the express requirements of Section 404, and would require management (i) to evaluate internal controls on a quarterly basis, (ii) to report the results of that evaluation in quarterly and annual SEC reports, and (iii) to make additional...