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Sarbanes-Oxley Act This section includes information on the Sarbanes-Oxley Act issued by the Stock Exchanges, the SEC and other regulatory bodies in the US. June 2004 April 2004 March 2004 November 2003 October 2003 June 2003 May 2003 March 2003 January 2003 October 2002
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SEC Approves the Auditing Standard No. 3 on Audit Documentation Order Approving Proposed
Auditing Standard No. 3, Audit Documentation, and an Amendment to
Interim Auditing Standards - AU sec. 543, Part of Audit Performed by
Other Independent Auditors SEC Approves the Auditing Standard No. 3 on Audit Documentation
___________________________________________________ SEC Approved the Auditing Standard on the Audit of Internal Control On 17 June 2004, Securities and Exchange Commission (SEC) approved, the Public Accounting Oversight Board's (PCAOB's) Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting Performed in Conjunction with An Audit of Financial Statements. This auditing standard governs the independent auditors' audit and reporting on management's assessment of the effectiveness of internal control over financial reporting. Paragraphs 55 through 59 of this proposed standard address the external auditor's responsibility, as part of its audit of internal control over financial reporting, to evaluate the effectiveness of the audit committee's oversight of the company's financial reporting. The PCAOB's Auditing Standard No. 2, their Briefing Paper on Auditing Standard No. 2, the PCAOB's Staff Questions and Answers, SEC's approval of the standard; and KPMG's Defining Issues related to this topic can be accessed by the following link: PCAOB Approved Auditing Standard No. 2 & related documents
___________________________________________________ Sarbanes-Oxley Section 404: An Overview of the PCAOB's Requirements In March 2004, the Public Company Accounting Oversight Board (PCAOB) approved its Auditing Standard No. 2, An Audit of Internal Control Over Financial Reporting performed in Conjunction with An Audit of Financial Statements. The Standard is now under review by the Securities and Exchange Commission. To assist in understanding the provisions of the standard, KPMG has released a new publication, Sarbanes-Oxley Section 404: An Overview of the PCAOB's Requirements. This white paper provides information relating to management's overall responsibilities regarding internal control over financial reporting, including its evaluation and assessment pursuant to Section 404 of the Sarbanes-Oxley Act. Further, the publication provides information regarding the responsibilities of independent auditors in performing an audit of internal control over financial reporting in conjunction with an audit of financial statements. Additional information on the PCAOB's Auditing Standard No. 2 is available above under the section titled "SEC Approved the Auditing Standard on the Audit of Internal Control." Sarbanes-Oxley Section 404: An Overview of the PCAOB's Requirements Corporate Accountability Reforms Comparison On 31 March 2004, KPMG's US Audit Committee Institute has updated a side-by-side comparison of select elements of the Sarbanes-Oxley Act of 2002 and the NYSE, NASDAQ, and AMEX corporate governance listing standards approved by the Securities and Exchange Commission in November / December 2003. This summary is meant to provide an overview of elements of the new requirements that impact audit committees and the status of these issues. Select Elements of Corporate Accountability Reforms Impacting Audit Committees ___________________________________________________ GAO Study on the Potential Effects of Mandatory Audit Firm Rotation The Sarbanes-Oxley Act 2002 (the Act) required the United States General Accounting Office (GAO) to study the potential effects of requiring rotation of the public accounting firms that audit public companies registered with the Securities and Exchange Commission (SEC). The required GAO study, issued in November 2003, states that mandatory audit firm rotation "may not be the most efficient way to strengthen auditor independence and improve audit quality considering the additional financial costs and the loss of institutional knowledge of the public company's previous auditor of record, as well as the current reforms being implemented". The GAO recommended that the SEC and the Public Company Accounting Oversight Board closely monitor and evaluate the effectiveness of the reforms under the Sarbanes-Oxley Act for enhancing auditor independence and audit quality. The GAO study can be assessed through the following link: ___________________________________________________ Defining Issues – Implications of Proposed Auditing Standard on Internal Control This edition of KPMG’s Defining Issues describes the proposed auditing standard on internal control that applies to public companies subject to an independent audit of management's assessment of internal control over financial reporting. The likely procedures are set out in a proposed standard by the Public Company Accounting Oversight Board (PCAOB), titled, Audits of Internal Control Over Financial Reporting Performed in Conjunction With an Audit of Financial Statements. The audit of internal control, required under the Sarbanes-Oxley Act, would be integrated with the audit of the financial statements and with an objective of concluding on the effectiveness of internal control over financial reporting, including management's evaluation of those controls. Defining Issues – Implications of Proposed Auditing Standard on Internal Control Defining Issues – Final Rules on Internal Control Reporting and Officer Certifications This latest edition of KPMG’s Defining Issues explains the major provisions the Securities and Exchange Commission's (SEC) final rules governing management’s report on internal control over financial reporting and revisions to certification of disclosure in Exchange Act periodic reports. The rules, which implement requirements in the Sarbanes-Oxley Act, delay the originally proposed effective date for filing management’s report on internal control over financial reporting. Defining Issues – Final Rules on Internal Control Reporting and Officer Certifications Defining Issues – SEC Adopts Internal Control Rules-Delays Implementation This latest edition of KPMG's Defining Issues describes the major provisions of the Securities and Exchange Commission's (SEC) soon-to-be published final rule governing management reports on internal control over financial reporting, including delayed implementation requirements. This issue is based on observations from the SEC's open meeting and press release. Defining Issues – SEC Adopts Internal Control Rules-Delays Implementation Sarbanes-Oxley Section 404: Management Assessment of Internal Control and the Proposed Auditing Standards Public companies and their independent auditors will soon face deadlines for internal control reporting under Section 404 of the Sarbanes-Oxley Act of 2002. The Act requires management to assess internal control over financial reporting, report on the assessment, and subject the assessment to audit by the company’s independent auditor. This KPMG publication (second in a series), “Sarbanes-Oxley Section 404: Management Assessment of Internal Control and the Proposed Auditing Standards” (March 2003), summarizes the requirements of Section 404 and the proposed standards recently issued as Exposure Drafts by the American Institute of Certified Public Accountants (AICPA). It is intended to provide information that may assist audit committee members and company management as they work to understand their roles and new responsibilities -- and the new responsibilities of the company’s independent auditor. ___________________________________________________ Sarbanes-Oxley: A Closer Look (January 2003) is a KPMG LLP publication that summarizes the Sarbanes-Oxley Act of 2002, as well as the new and proposed Securities and Exchange Commission (SEC) rules and interpretive commentary. This guidance also provides a foundation for understanding the new responsibilities for corporate governance, management reporting, financial statement disclosures, management assessment of internal controls, and the changed responsibilities of auditors. This 64-page publication is intended as a reference tool to help audit committee members understand their broader duties and to clarify the issues that face top executives, who are now confronted with greater potential exposure to personal liability as a result of the new laws in the US. ___________________________________________________ ACI Develops Corporate Accountability Reforms Comparison The Audit Committee Institute ("ACI") has developed a side-by-side comparison of selected elements of the Sarbanes-Oxley Act of 2002 and the NYSE, NASDAQ, and Amex stock exchange proposals that impact audit committees. This high-level overview of these key elements of the corporate accountability reforms also includes some general observations and is up-to-date as at October 22, 2002. Comparison of Sarbanes-Oxley Act/Stock Exchanges Proposals Elements Impacting
Audit Committee Enactment of Sarbanes-Oxley Act of 2002 On July 30, 2002, US President George W. Bush signed into law the Sarbanes-Oxley Act of 2002 (Accounting Industry Reform Act). The law creates an oversight board to monitor the accounting industry, toughens penalties against executives who commit corporate fraud and increases the Securities and Exchange Commission ("SEC") budget for auditors and investigators. The law is intended to restore investor confidence in US markets and its enactment was a landmark event, representing the most dramatic changes in US Federal Securities laws since the 1930s. The Sarbanes-Oxley Act of 2002 ___________________________________________________ |
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