Question & Answer: Just a paragraph for the discussion…..

Control structure for safeguarding financial reporting is governed by Section 404 of Sarabanes-Oxley Act of 2002 (SOX). As per SOX companies that are subjected to reporting requirements of SEC (Securities and Exchange Commission) will have to include in their annual reports a report of the management with regards to the company’s internal control over its financial reporting. The components of internal controls must include – a statement with regards to the responsibilities of the management towards establishing and maintaining adequate internal control over financial reporting for the company, assessment done by the management to determine the effectiveness of its internal control over financial reporting, and a statement with regards to the framework that the management uses to evaluate the effectiveness of the company’s internal control over financial reporting. My suggestion and recommendation for strengthening the current control structure is to give the regulators more teeth. Audit oversight, securities, and prudential regulators are important parties in this regards. Secondly regulators obtain supplemental financial disclosures.