Reporting on internal control-public companies

Reference no: EM1350787

The profession has argued for decades about the advisability of mandatory reporting on internal control by public companies and by governmental entities. In the 1970s and 1980s, the main players in the debate were the Commission on Auditorsâ?? Responsibilities (the Cohen Commission), the AICPA, and the SEC, among others, and their arguments were chronicled in L. M. Savoie and D. N. Ricchiute, â??Reports by Management: Voluntary or Mandatory?â? Journal of Accountancy (May 1981), pp. 84â?"94. More recently, in addition to the AICPA and the SEC, new players, most supportive of mandatory reporting, have entered the debate, including the Commission on Fraudulent Financial Reporting (the Treadway Commission), the Committee of Sponsoring Organizations (COSO) of the Treadway Commission, the U.S. General Accounting Office, and the Federal Deposit Insurance Corporation (FDIC), which, through the FDIC Improvement Act, requires public reporting for large federally insured banks and thrifts. â??The COSO Report: Challenge and Counterchallenge,â? Journal of Accountancy (February 1993), pp. 10â?"18, reprints two pointed letters exchanged by COSO and the GAO, some of which bears directly on the debate in the 1990s. Prior to the Sarbanes-Oxley Act of 2002, Section 404, about one in four public companies and three in five Fortune 500 companies voluntarily reported on internal control.

Required: Select a Form 10-K for a period ended prior to November 15, 2004 (the effective date of Section 404), that includes a report by management on internal control, and a Form 10-K for a period ended after November 15, 2004, that includes managementls assessment of internal control over financial reporting, and draft a report that:

1. Compares the two reports.

2. Argues either for or against public reporting on internal control.

Reference no: EM1350787

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