Internal Control System

U.S. listed companies are obliged to install and maintain an appropriate internal control system due to the requirements of Section 404 of the Sarbanes-Oxley Act. The management of the company has to perform a test of effectiveness of this internal control system on an annual basis and has to prepare a report on the assessment. German companies as foreign private issuers and German affiliates of U.S. companies have to comply with this obligation.

The internal control system comprises all organisational measures and controls which ensure the compliance, the reliability and the correctness of the accounting and the quarterly and annual financial statements derived from the accounting.

The management of the company has to enclose a statement concerning the effectiveness of the accounting-related internal control system in the financial statements. The explosiveness of this approach lies in the fact that this statement and with it the effectiveness of the internal control system becomes a subject-matter of the audit. The auditor has to certify if the management’s assessment regarding the appropriateness and the functioning of the internal control system is correct. Chairmen of the board and CFOs of U.S. listed companies have full private liability for the correctness of the statements concerning the financial situation of the company and the effectiveness of internal controls.

I will make you fit for SOX 404 and will assist you in the installation and implementation of an appropriate and advantageous internal control system and its necessary documentation. I will make sure that standardised control mechanisms are installed which will enhance corporate governance. Furthermore, I am able to assist you with qualified auditors to perform the necessary extensive tests of control. In general, I advise such tests of control in preparation of the ‚SOX‘ audit to avoid negative ‚surprises‘.