2004 Annual Review of Financial Reporting Matters - Huron ...

imposed limits, through their audit
committee charters, on the number of
other audit committees on which their
members may serve.
The report also addresses director
compensation packages and other
structural and governance related
matters. It's a very useful and informative
analysis, and a "must read" for those
wanting to observe shifts and trends in
the corporate governance world.
2004: The Year of the Internal Auditor
– Courtesy of SOX 404.
Even with all of the high profile financial
reporting events and news in 2004, it
would be hard to top the amount of
discussion and activity surrounding the
documentation and testing of registrants'
accounting control processes. Major
questions that arose during these
discussions include:
• If the controls have always been in
place, why has the implementation
process been so hard for some
registrants to accomplish
• What will the market and regulatory
punishment be for material weakness
reports
• Should "small" public registrants really
have to incur the expense of this
process
• Does an auditor determination of
company control problems today call
into question prior auditor reliance on
those systems
• Can it be considered a material
weakness if a registrant's accounting
and finance staff relies on their auditor
for guidance and interpretations of
GAAP
• Have reporting risks been minimized
by this work
• Do the benefits to investors and the
public markets outweigh the significant
costs and distractions caused by this
work
Clearly, there wouldn't be so much
discussion if these questions had easy
answers. However, one thing is certain:
as a result of the implementation of SOX
404, the internal auditor has never felt so
important!
16 | 2004 Annual Review of Financial Reporting Matters