September 23, 2004

Sample Section 404 Management Reports

A common question these days is what should my Section 404 management report look like? I hear that the national offices of the Big Four are working on forms for what they would like to see from their clients – but they have not released these forms yet. In the meantime, we have posted some sample management reports that companies have voluntarily filed as well as model forms from the AICPA (these are posted in our Sample Document Library and Internal Controls Practice Area). Thanks to Bob Hayward of Kirkland & Ellis for the heads up!

From what I’ve gleaned from the PCAOB releases, these reports should be pretty short and conclusory – more like an auditor’s letter than a full-blown, detailed report, as Auditing Standard No. 2 does not seem to contemplate a detailed discussion of what happened during management’s assessment and testing.

Perhaps a more interesting question is whether the Big Four will develop checklists of the types of issues they will seek during their assessment process, or what type of records they will create to evidence the diligence performed to support their attestations.

Today’s 8-K Webcast

Thanks for the scores of questions for “Reality Bites: More on the New 8-K Rules” – I hope to extend the program beyond the hour slated for the webcast and have the panel answer as many as we can. Had one good suggestion to change webcast title to “Real Time Bites”!