Enhanced Financial Disclosures Sec. 401: Disclosures in Periodic Reports Sec. 402: Enhanced Conflict of Interest Provisions. Sec. 403: Disclosures of Transactions Involving Management and Principal Stockholders
Enhanced Financial Disclosures Sec. 404: Management Assessment of Internal Controls Sec. 405: Exemption Sec. 406: Code of Ethics for Senior Financial Officers. Sec. 407: Disclosure of Audit Committee Financial Expert
Enhanced Financial Disclosures Sec. 408: Enhanced Review of Periodic Disclosures by Issuers Sec. 409: Real Time Issuer Disclosures
Section 404: Management Assessment of Internal Controls Final Rule issued by the SEC May 27, 2003. Effective June 15, 2004 or April 15, 2005.
Sec. 404(a) Internal Control Reports Applies to companies subject to the reporting requirements of the Securities Exchange Act of 1934. These companies must include in their annual reports a report of management on the company’s internal control over financial reporting.
Report Must Include... 1.A statement of management’s responsibility for establishing and maintaining adequate internal control over financial reporting for the company.
Report Must Include... 2.Management’s 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.
Report Must Include... 3.A statement identifying the framework used by management to evaluate the effectiveness of the company’s internal control over financial reporting.
Report Must Include... 4.A statement that the firm’s auditor has issued an attestation report on management’s assessment.
Defining Internal Control for Sec. 404 of Sarbanes-Oxley
A process designed by, or under the supervision of, the registrant’s principal executive and principal financial officers, or persons performing similar functions, and effected by the registrant’s board of directors, management and other personnel, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
1.Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the registrant.
2.Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the registrant are being made only in accordance with authorizations of management and directors of the registrant.
3.Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the registrant’s assets that could have a material effect on the financial statements.
Title VIII: Corporate and Criminal Fraud Accountability
Corporate and Criminal Fraud Accountability Sec. 802: Criminal Penalties for Altering Documents Destruction, alteration, or falsification of records in federal investigations and bankruptcy. Fined and/or imprisoned for not more than 20 years. HealthSouth
Corporate and Criminal Fraud Accountability Sec. 802: Criminal Penalties for Altering Documents Destruction of corporate audit records Fined and/or imprisoned not more than 5 years. Thomas Trauger – former Ernst & Young partner.
Title IX: White-Collar Crime Penalty Enhancements
White-Collar Crime Penalty Enhancements Criminal penalties for mail/wire fraud 5 years 20 years Amendment to sentencing guidelines relating to Employee Retirement Income Security Act of 1974. $5,000 $100,000 2 Year 10 years $100,000 $500,000
White-Collar Crime Penalty Enhancements Failure of corporate officers to certify financial reports. Fined $1,000,000 and/or imprisoned not more than 10 years. Fined $5,000,000 and/or imprisoned not more than 20 years.