Compliance


COMPLIANCE
Research on material weaknesses among smaller public companies complying for the first time with Sarbanes-Oxley section 404 found that the highest number of missteps are related to accounting and disclosure controls.

A study by Lord & Benoit, a firm specializing in SOX compliance, identified what it described as the 10 leading material weaknesses among 148 companies with revenue of less than $100 million. Companies with effective internal controls were excluded from the study.

Nearly two-thirds of the companies with material weaknesses had issues linked to accounting and disclosure controls, including inadequate or inaccurate financial statement disclosures and departures from GAAP. Other leading problem areas included:

Treasury
Competency and training of accounting personnel
Control environment
Design of controls/lack of effective compensating controls
Revenue recognition
Financial closing process
Inadequate account reconciliations
Information technology
Consolidations, mergers and intercompany accounts

SPONSORED REPORT

The technology assessment engagement

Are you working with the best technology? Do you know how to help your clients determine if their technology stack measures up? In this free report, J. Carlton Collins, CPA, explains how to answer those questions via a technology assessment engagement.

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