AICPA Sample SOX 404 Management Reports

By: Cydney Posner

Below for your reference are sample SOX 404 management reports, provided by the AICPA:

AICPA Sample Management Report - No Material Weaknesses (9/04)

The management of ABC is responsible for establishing and maintaining adequate internal control over financial reporting. ABC's internal control system was designed to provide reasonable assurance to the company's management and board of directors regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. [Author's note: This statement regarding the inherent limitations of internal control is not required by SEC rules. It is included in this sample report solely for illustrative purposes.]

ABC management assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2004. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on our assessment we believe that, as of December 31, 2004, the company's internal control over financial reporting is effective based on those criteria.

ABC's independent auditors have issued an audit report on our assessment of the company's internal control over financial reporting. This report appears on page xx.

AICPA Sample Management Report - Material Weaknesses Identified (9/04)

[Introductory paragraph-same as in above.]
[Optional, inherent limitations paragraph-see above.]

An internal control material weakness is a significant deficiency, or aggregation of deficiencies, that does not reduce to a relatively low level the risk that material misstatements in financial statements will be prevented or detected on a timely basis by employees in the normal course of their work. An internal control significant deficiency, or aggregation of deficiencies, is one that could result in a misstatement of the financial statements that is more than inconsequential.

The management of ABC assessed the effectiveness of the company's internal control over financial reporting as of December 31, 2004, and this assessment identified the following material weakness in the company's internal control over financial reporting.

[Describe the material weakness.]

In making its assessment of internal control over financial reporting management used the criteria issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Because of the material weakness described in the preceding paragraph, management believes that, as of December 31, 2004, the company's internal control over financial reporting was not effective based on those criteria.

ABC's independent auditors have issued an attestation report on management's assessment of the company's internal control over financial reporting. It appears on page xx.

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