US CMA Part 1 · Chapter 5 · Question 6 of 23
Under Section 404 of the Sarbanes-Oxley Act, management of a public company must:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Include in the annual report an assessment of the effectiveness of internal control over financial reporting
Explanation
Section 404(a) requires management to include in the annual report its assessment of the effectiveness of internal control over financial reporting. Section 404(b) requires the external auditor to attest to that assessment only for accelerated filers and large accelerated filers; non-accelerated filers are exempt from 404(b) but still must provide management's 404(a) report. Management reports any material weaknesses rather than certifying that no deficiencies exist, and SOX requires rotation of the lead audit partner, not of the audit firm.
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