Navigating Sarbanes-Oxley (SOX) 404 Audits
Public companies are mandated under SOX 404 to evaluate and report on the effectiveness of Internal Controls over Financial Reporting (ICFR).
Audit Severity Classification
| Deficiency Class | Definition | Reporting Requirement |
|---|---|---|
| Control Deficiency | Control fails to prevent or detect misstatements on a timely basis. | Internal Management & Audit Committee |
| Significant Deficiency | Merits attention by those charged with governance, less severe than Material Weakness. | Audit Committee & External Auditors |
| Material Weakness | Reasonable possibility that a material misstatement will not be prevented/detected. | Public SEC Filing (Form 10-K) & Adverse Audit Opinion |