SOX and IT Audit Programs John R. Robles Thursday, May 31, Tel:

SOX and the Audit Process Management must comply with Section 404 of the Section 404 Management Assessment Of Internal Controls … responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and … responsibility of management for establishing and maintaining an adequate internal control structure and procedures for financial reporting; and …contain an assessment, as of the end of the most recent fiscal year of the issuer, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting. …contain an assessment, as of the end of the most recent fiscal year of the issuer, of the effectiveness of the internal control structure and procedures of the issuer for financial reporting.

SOX and the Audit Process (b) INTERNAL CONTROL EVALUATION AND REPORTING- With respect to the internal control assessment required by subsection (a), each registered public accounting firm that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer. An attestation made under this subsection shall be made in accordance with standards for attestation engagements issued or adopted by the Board. Any such attestation shall not be the subject of a separate engagement. (b) INTERNAL CONTROL EVALUATION AND REPORTING- With respect to the internal control assessment required by subsection (a), each registered public accounting firm that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer. An attestation made under this subsection shall be made in accordance with standards for attestation engagements issued or adopted by the Board. Any such attestation shall not be the subject of a separate engagement.

External Auditors Attestation Attestation by External Auditors Attestation by External Auditors “Further more, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control – Integrated Framework issued by the COSO.” “Further more, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2006, based on criteria established in Internal Control – Integrated Framework issued by the COSO.”

External Auditors Attestation Attestation made after: Attestation made after: –Understanding of internal controls over financial reporting, –Evaluating management’s assessment, –Testing and evaluating the design and operating effectiveness of internal controls.

Attestation Example of: CPA Attestation CPA Attestation

Section 302: …Requires a company’s management, with the participation of the principal executive and financial officers (the certifying officers), to make the following quarterly and annual certifications with respect to the company’s internal control over financial reporting:

Section 302: 1. A statement that the certifying officers are responsible for establishing and maintaining internal control over financial reporting.

Section 302: 2. A statement that the certifying officers have designed such internal control over financial reporting, …

Section 302: 3. A statement that the report discloses any changes in the company’s internal control over financial reporting that occurred during the most recent fiscal quarter …

Certifications Example of: CEO Certification and CFO Certification CEO Certification and CFO Certification

Section Management’s report on internal control over financial reporting is required to include the following: 1. A statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the company.

Section Management’s report on internal control over financial reporting is required to include the following: 2. A statement identifying the framework used by management to conduct the required assessment of the effectiveness of the company’s internal control over financial reporting.

Section Management’s report on internal control over financial reporting is required to include the following: 3. An assessment of the effectiveness of the company’s internal control over financial reporting as of the end of the company’s most recent fiscal year, including an explicit statement as to whether that internal control over financial reporting is effective.

Section Management’s report on internal control over financial reporting is required to include the following: 4. A statement that the registered public accounting firm that audited the financial statements included in the annual report has issued an attestation report on management’s assessment of the company’s internal control over financial reporting.

Report on Assessment Example of: Management Assessment Report Management Assessment Report

Key control A control that, if it fails, means there is at least a reasonable likelihood that a material error in the financial statements would not be prevented or detected on a timely basis. In other words, a key control is one that provides reasonable assurance that material errors will be prevented or timely detected.

Testing of Key Internal Controls “The auditor should select for testing only those controls that to the auditor’s conclusion about whether the company’s controls sufficiently address the assessed risk of misstatement to a given relevant assertion that could result in a material misstatement to the company’s financial statements”.

Testing of Key Internal Controls The auditor’s testing of the operating effectiveness of such controls should occur at the time the controls are operating. The auditor’s testing of the operating effectiveness of such controls should occur at the time the controls are operating. Controls “as of” a specific date encompass controls that are. Relevant to the company’s internal control over financial reporting “as of” that specific date, even though such controls might not operate until after that specific date. Controls “as of” a specific date encompass controls that are. Relevant to the company’s internal control over financial reporting “as of” that specific date, even though such controls might not operate until after that specific date.

IT Control Objectives for SOX AI2 - Acquire and Maintain application software AI2 - Acquire and Maintain application software –High-level Design –Detailed Design –Application Control and Auditability AI3 - Acquire and maintain technology infrastructure AI3 - Acquire and maintain technology infrastructure –Technological Infrastructure Acquisition Plan –Infrastructure Resource Protection and Availability –Infrastructure Maintenance AI4 - Enable Operation and use AI4 - Enable Operation and use –Planning for Operational Solutions –Knowledge Transfer to Business Management –Knowledge Transfer to End Users

IT Control Objectives for SOX AI7 - Install and accredit solutions and changes AI7 - Install and accredit solutions and changes –Training –Test Planning –Implementation Planning AI6 - Manage changes AI6 - Manage changes –Change Standards and Procedures –Impact Assessment, Prioritization and Authorization –Emergency Changes

IT Control Objectives for SOX DS1 - Define and manage service levels DS1 - Define and manage service levels –Service Level Management Framework –Definition of Service –Service Level Agreements DS2 - Manage third-party services DS2 - Manage third-party services –Identification of All Supplier Relationships –Supplier Relationship Management –Supplier Risk Management DS5 - Ensure systems security DS5 - Ensure systems security –Management of IT Security –IT Security Plan –Identity Management

IT Control Objectives for SOX DS9 - Manage the configuration DS9 - Manage the configuration –Configuration Repository and Baseline –Identification and Maintenance of Configuration Items –Configuration Integrity Review DS8 - Manage service desk and incidents DS8 - Manage service desk and incidents –Service Desk –Registration of Costumer Queries –Incident Escalation

IT Control Objectives for SOX DS10 - Manage problems DS10 - Manage problems –Identification and Classification of Problems –Problem Tracking and Resolution –Problem Closure DS11 - Manage data DS11 - Manage data –Business Requirement of Data Management –Storage an Retention Agreements –Media Library Management System

IT Control Objectives for SOX DS12 - Manage physical environment DS12 - Manage physical environment –Site Selection and Layout –Physical Security Measures –Physical Access DS13 - Manage operations DS13 - Manage operations –Operation Procedures and Instructions –Job Scheduling –IT Infrastructure Monitoring

SOX and Audit Programs Thank You! John R. Robles Thursday, May 31, Tel: