What You Need to Know About Section 404
Section 404 of the Sarbanes-Oxley Act (SOX) says that publicly traded companies must establish, document, and maintain internal controls and procedures for financial reporting. It also requires companies to check the effectiveness of internal controls and procedures for financial reporting.
In order to do this, companies must:
- Document existing controls and procedures that relate to financial reporting.
- Test their effectiveness.
- Report on any gaps or poorly documented areas.