As an initiative to re-establish investor confidence, the Sarbanes-Oxley Act of 2002 has made executive certifications of financial statements a permanent requirement applicable to all publicly traded companies in the U.S. In its release on August 29, the Securities and Exchange Commission introduced a newly defined term, "disclosure controls and procedures," to expand the concept of internal controls over financial reporting to the broader area of controls and procedures over disclosure of material financial and non-financial information in public reports.
The focus of this booklet is on these new executive certification requirements. These requirements are a major area of emphasis for many companies preparing to make their first filing subsequent to August 29. While the certifying officers have always been responsible for and have been exposed to liability associated with financial and public reporting, Sarbanes-Oxley has raised the stakes. The risks are higher and the consequences are more significant.
There are many questions on the minds of directors, certifying executives, other senior managers and auditors as they work together to facilitate compliance with these requirements. The questions listed in this booklet are the most common ones we have received in our discussions with many clients, attorneys and others in the marketplace who are dealing with these requirements. We have provided responses and views based on our experience that we hope will assist executives as they evaluate their company’s disclosure controls infrastructure and processes supporting the executive certifications. We have also held discussions with the SEC to understand their views on certain points and confirm our interpretations in selected areas.
This booklet is not intended to provide a legal analysis. Companies should seek legal counsel and appropriate risk advisors for advice on specific matters. Further, these issues are still subject to possible regulatory, judicial and legislative change and will continue to evolve. Protiviti will provide updates to these interpretations on www.protiviti.com