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SOX Section 404 Internal Control Over Financial Reporting (ICFR) Checklist

A comprehensive checklist for financial services companies to assess, document, and certify the effectiveness of their internal controls over financial reporting in compliance with SOX Section 404 requirements.

SOX Section 404 Internal Control Over Financial Reporting (ICFR) Checklist

by: audit-now
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About This Checklist

The SOX Section 404 Internal Control Over Financial Reporting (ICFR) Checklist is an essential tool for financial services organizations to ensure compliance with one of the most critical aspects of the Sarbanes-Oxley Act. This comprehensive checklist guides companies through the process of assessing, documenting, and certifying the effectiveness of their internal controls over financial reporting. By implementing this checklist, organizations can enhance the reliability of their financial statements, detect and prevent material misstatements, and build investor confidence. Regular use of this SOX ICFR checklist enables businesses to maintain robust financial reporting processes, mitigate risks of fraud, and demonstrate commitment to transparency and accountability.

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Industry

Financial Services

Standard

SOX Section 404 - Management Assessment of Internal Controls

Workspaces

Finance departments
Office Buildings

Occupations

Chief Financial Officer
Internal Auditor
Financial Controller
Compliance Officer
Risk Management Specialist
1
How effective are the internal controls in preventing material misstatements?

Select the appropriate effectiveness level.

To assess the reliability of financial reporting.
2
What is the frequency of control testing?

Enter the frequency in months.

To determine if controls are being tested regularly.
Min: 1
Target: Monthly
Max: 12
3
Who is responsible for the internal controls?

Enter the name of the control owner.

To ensure accountability and clear ownership.
4
Is the documentation for internal controls readily available?

Indicate if documentation is available.

To verify if the documentation is accessible for review.
5
What actions are being taken to improve internal controls?

Describe the improvement actions.

To assess ongoing improvements to the control environment.
6
What is the assessment result of the internal controls?

Select the outcome of the control assessment.

To evaluate the overall effectiveness of the control environment.
7
How many internal controls were tested during the audit?

Enter the total number of controls tested.

To gauge the extent of control testing performed.
Min: 1
Target: 10
Max: 100
8
What methodology was used for testing the controls?

Describe the control testing methodology used.

To understand the approach taken for control testing.
9
Are there remediation plans in place for any identified weaknesses?

Indicate if remediation plans exist.

To confirm that there are actionable steps for improvement.
10
When is the next internal controls review scheduled?

Select the date for the next review.

To ensure ongoing monitoring and evaluation of controls.
11
Is the audit trail complete for all financial transactions?

Select the completeness status of the audit trail.

To verify that all transactions are properly documented.
12
When was the last audit trail review conducted?

Select the date of the last review.

To ensure that audit trails are reviewed regularly.
13
How many discrepancies were found in the audit trail?

Enter the total number of discrepancies found.

To quantify issues that may indicate control weaknesses.
Min: 0
Target: 0
Max: 100
14
Have any incident reports been generated as a result of the audit trail review?

Indicate if incident reports were created.

To determine if issues were significant enough to warrant reporting.
15
Please provide any comments or observations regarding the audit trail.

Detail any relevant comments.

To capture insights and recommendations for improvements.

FAQs

The primary focus is to guide companies in assessing, documenting, and certifying the effectiveness of their internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act.

While management is primarily responsible for implementing and maintaining ICFR, the process involves collaboration between finance, internal audit, IT, and other relevant departments, with oversight from the audit committee and board of directors.

Companies should conduct a full assessment of their ICFR annually, with ongoing monitoring and testing throughout the year to ensure controls remain effective.

Key components include control environment, risk assessment, control activities, information and communication systems, and monitoring activities, all aligned with the COSO Internal Control-Integrated Framework.

Identifying a material weakness requires disclosure in SEC filings, can lead to a negative audit opinion, may result in decreased investor confidence, and could potentially impact the company's stock price and financial stability.

Benefits

Ensures compliance with SOX Section 404 requirements for ICFR

Enhances the accuracy and reliability of financial reporting

Reduces the risk of material misstatements and financial fraud

Improves overall financial management and decision-making processes

Strengthens investor confidence through demonstrated commitment to internal control