SARBANES OXLEYSARBANES OXLEY

CORPORATE CERTIFICATION OF FINANCIAL STATEMENTS

Sarbanes Oxley Sections 302, Sarbanes Oxley Sections 302, 404 & 906a404 & 906a

Sections 302, 404 & 906a of the Sarbanes Oxley Act 2002 contain the following requirements:

302 – Corporate responsibility for financial reports

404 – Assessment of internal controls906a – Certification of periodic financial

reports

Section 302 OverviewSection 302 Overview

Section 302 of the Sarbanes Oxley Act 2002 requires that:

an Issuer’s annual and quarterly financial statements are certified by the organisation’s principal officers for:– correctness – completeness– effectiveness of underlying internal controls

Section 302 Summary of Section 302 Summary of RequirementsRequirements

Certification required by Issuer’s principal officers confirming that quarterly and annual financial statements:

Disclose material untrue statements or omissions

Fairly present financial condition and resultsAre supported by effective internal controls

Definition of Principal Officers Definition of Principal Officers (302)(302)

The Sarbanes Oxley Act defines “principal officers” as:

principal executive officer (CEO)principal financial officer (CFO)officers performing similar roles to the CEO

or CFO

Review of Report by Review of Report by Signing Officer (302)Signing Officer (302)

The signing officers are to certify that they have actually reviewed the report being published

The signing officers should understand all aspects of the report and raise any concerns they have about its contents

Review of Report by Review of Report by Signing Officer (302)Signing Officer (302)

An effective process should exist within the organisation to pre-check correctness and completeness of the report

Consideration should be given to introducing an upward certification process within the organisation

Untrue Statements or Untrue Statements or Omissions (302)Omissions (302)

Based on their knowledge, the signing officers must certify that the report does not:

contain any material untrue statements

omit to state a material fact

- that may be considered to be misleading

Financial Condition and Financial Condition and Results (302)Results (302)

Based on their knowledge, the signing officer must certify that the financial statements fairly and accurately reflect the Issuer’s:

Financial condition as at a specific date

Results for the specific periods as stated in the report

- in all material respects.

Responsibility for Internal Responsibility for Internal Control Systems (302)Control Systems (302)

The signing officer(s) must certify that they:are responsible for the disclosure controls and

the internal control systems (ICS)have ensured that material information is

communicated to the signing officershave evaluated the ICS in last 90 days to

filing datehave reported findings from evaluation

process

Reporting on Internal Control Reporting on Internal Control Systems (ICS) (302)Systems (ICS) (302)

Following their ICS evaluation, the signing officer(s) must report to the audit committee and external auditors:

all significant deficienciesany material weaknessesAny fraud, whether material or not, involving

any person involved in the ICSAny significant changes to the ICS since

evaluation

Internal Control Report (404)Internal Control Report (404)

An Issuer’s annual report must include an internal control report that:

Confirms management responsibility for the internal control structure

Confirms management responsibility for the financial reporting procedures

Includes an assessment of of the effectiveness of the ICS

Requires the external auditor to provide an opinion on this assessment

Certification of Periodic Certification of Periodic Financial Reports (906a)Financial Reports (906a)

Section 906a requires certification of each periodic financial report by the CEO and CFO that:

the report complies with the Exchange Act

The information fairly presents, in all material aspects, the financial condition and results of the issuer.

Foreign Re-incorporations Foreign Re-incorporations Ineffective Ineffective

Sarbanes Oxley prohibit Issuers from trying to reduce the legal implications of Section 302 through:

Re-incorporation outside the United States

Engaging in a transaction that results in transfer of corporate domicile outside the United States

Upward Certification System Upward Certification System

Relates to requirements of Sarbanes Oxley Act Sections 302, 404 and 906a

Creates chain of certifications for the internal control system (ICS) based on agreed procedures and check lists

Involves all levels of specialists and management in the ICS certification process

Upward Certification System Upward Certification System

Each specialist responsible for a business process with a material risk profile certifies that specific business process

Each level of management certifies their own area of responsibility based on the individual business process certifications received

Results can form basis of report required for Section 404 reporting

Upward Certification – Upward Certification – BenefitsBenefits

All areas of the business are coveredProvides structured audit trailEasier to re-certify specialist areas of the

businessEasier to follow up to correct deficiencies

and problemsAll management have a corporate

responsibility for the process

Upward Certification - ImplementationUpward Certification - Implementation

Develop procedures covering the certification process

Design common forms and checklistsTrain staff in understanding internal control

system (ICS)Train staff in evaluating the ICS and

assessing risksMonitor and report on deficiencies identified

Upward Certification - Upward Certification - EnforcementEnforcement

Make all specialists and management accountable for the certification process

Ensure each process re-evaluated each time the certification forms are required

Have evaluation process audited and checked

Maintain audit trail of check lists and certifications

SARBANES OXLEYSARBANES OXLEY

CORPORATE CERTIFICATION OF FINANCIAL STATEMENTS

End of Presentation

Copyright 2002

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