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Runninga Head:a ACCa 675a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 1
4-2a Finala Projecta Milestonea Two:a Firsta Yeara ofa SOXa Compliance
ACC675
SNHU
Milestonea 2a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 2
Aa detaileda analysisa ofa Trinitya Industries’a firsta yeara ofa Sarbanes–Oxleya (SOX)a compliancea
hasa beena conducteda toa ascertaina howa itsa functionala workflowsa functiona anda identifya possiblea gapsa
ina itsa accountinga systems.a
Criticala elementsa toa Trinity’sa decisivea successa
Ina thea contexta ofa Trinitya Industries’,a aa diversea rangea ofa elementsa maya arisea anda playa aa
criticala rolea ina thea organization’sa decisivea successa ina itsa firsta yeara ofa Sarbanes–Oxleya compliance.a
Onea ofa thea maina elementsa isa thea existencea ofa aa standardizeda reportinga systema thata isa followeda
withina thea organization.a Anothera chiefa elementa isa thea documentationa ofa thea controla environmenta
withina thea organization.a Considerablea efforta isa involveda ina documentinga anda testinga thea automateda
anda manuala controls.a Thea othera criticala elementsa ina thea businessa contexta area thea evaluationa ofa thea
gapa relatinga toa SOXa compliancea anda thea recommendationsa thata havea beena madea toa addressa thea
currenta gapsa soa thata propera compliancea cana bea ensureda bya thea businessa entity.a
Internala Controls
Accordinga toa thea Publica Companya Accountinga Oversighta Boarda (PCAOB),a aa numbera ofa
internala controlsa needa toa bea introduceda fora thea purposea ofa preparinga accuratea anda reliablea financiala
reports.a Onea ofa thea maina internala controlsa isa companya policies,a procedures,a anda practicesa thata havea
beena designeda toa ensurea reasonablea assurancea abouta thea reliabilitya ofa thea financiala reportinga ofa aa
firm.a Policiesa alsoa influencea thea processesa thata area adopteda bya firmsa fora preparinga anda accuratelya
presentinga financiala statementsa asa pera thea generallya accepteda accountinga principlesa (GAAP)a (No,a
2004,pa .a 4).a Thea othera internala controlsa area governancea framework,a riska assessment,a entry-levela
controls,a anda thea testinga strategy.a Ina thea contexta ofa Trinitya Industries’,a thea specifica internala
Milestonea 2a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 3
controlsa thata area ina placea toa preparea accuratea anda reliablea financiala reportsa includea validationa
testing,a roll-outa organizationala self-assessment,a anda documentationa ofa thea controla environment.a a
Materiala weakness
Aa materiala weaknessa ina termsa ofa SOXa compliancea refersa toa aa deficiencya ora combinationa ofa
deficienciesa relatinga toa internala controla overa thea financiala reportinga activity.a Duea toa thea existencea
ofa sucha aa weakness,a therea isa aa possibilitya ofa aa materiala misstatementa toa arisea thata maya distorta aa
company’sa interima ora annuala financiala statementsa (No,a 2004).a Somea ofa thea signsa ofa materiala
weaknessa includea identificationa ofa fraudulenta activitiesa ina parta ofa thea seniora management,a poora
anda ineffectivea oversighta ofa aa firm’sa externala financiala reportinga anda internala controla overa
financiala reportinga bya itsa audita teama (No,a 2004)..a
Materiala weaknessesa specifica toa Trinitya Industries’
Ina thea specifica casea involvinga Trinitya Industries’a therea exista aa numbera ofa materiala
weaknessesa thata havea thea potentiala toa compromisea thea accuracya anda validitya ofa thea financiala
statementsa ofa thea organization.a Onea ofa thea chiefa weaknessesa isa thea identificationa ofa 14a deficienciesa
accordinga toa thea externala audita testinga thata wasa conducteda bya E&Y.a Anothera vitala signa ofa materiala
weaknessa withina thea organizationa isa thea adoptiona ofa aa practice-baseda bottom-upa analysisa ofa thea
worka practicesa withina thea organization.a Fora identifyinga thea internala controls,a inputa wasa takena froma
thea organizationala members,a anda thena suitablea flowchartsa anda controla matricesa werea designeda fora
internala controla purposes.a Baseda ona sucha ana approach,a therea wasa noa propera frameworka ina placea
thata coulda bea followeda bya thea organizationala personnela toa addressa gapsa anda deficienciesa thata
existeda ina thea organizationala processes.a
Standardsa ina PCAOBa regardinga materiala weakness
Milestonea 2a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 4
PCAOBa hasa introduceda aa numbera ofa standardsa ina ordera toa effectivelya addressa thea issuea
relatinga toa materiala weaknessesa thata maya arisea anda distorta thea financiala reportinga processesa ofa
organizations.a Thea Auditinga Standarda 5a ofa PCAOBa focusesa ona performinga ana audita ofa internala
controlsa overa financiala reportinga thata isa integrateda witha thea audita ofa thea financiala statements.a Ita
mainlya focusesa ona thea stepsa thata ana auditora needsa toa takea ina ordera toa effectivelya performa ana audita toa
ensurea thea effectivenessa ofa internala controla overa thea financiala reportinga functiona anda ascertaina
therea exista noa materiala weaknesses.a Accordinga toa Sarbanes–Oxleya (SOX)a Sectiona 404,a ita isa
essentiala fora companiesa toa includea ana assessmenta ofa thea overalla effectivenessa ofa internala controlsa
(Sarbanes-Oxleya Sectiona 404a Aa Guidea fora Smalla Business.a SECa Emblem,a 2017).a
Factorsa contributinga toa Trinitya Industries’a success
Somea ofa thea keya factorsa thata influenceda thea successa ofa Trinitya Industries’,a asa aa businessa
includea thea existencea ofa aa diversea rangea ofa controls,a namelya ‘A’a controls,a ‘B’a controls,a ‘C’a
controlsa anda unrankeda controls.a Thesea controlsa playeda aa keya rolea ina identifyinga gapsa ina thea
businessa processesa anda operations.a Anothera vitala successa factora involvesa aa higha emphasisa ona
training.a Foura levelsa ofa traininga werea introduced,a includinga high-levela guidancea ona SOXa (fora
seniora executives),a COSOa traininga fora thea controllersa ina Trinity,a SOXa documentationa traininga fora
diversea documentationa teams,a anda controla ownera training.a Thisa strategya empowereda thea staffa
membersa toa gaina aa bettera insighta intoa SOXa anda thea needa toa complya witha it.a Aa self-assessmenta
processa wasa alsoa introduceda toa increasea thea accountabilitya ofa thea managementa team.a Thea
flowcharta capturesa thea factorsa ina aa visuala format.a
Milestonea 2a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 5
Introductiona ofa controls
‘A’a controls
‘B’a controls
‘C’a controlsa
Unrankeda controls
Traininga
High-levela guidancea ona SOXa
COSOa traininga fora thea controllersa
SOXa documentationa traininga
Controla ownera training
Self-assessmenta processa
Fora bettera accountability
Milestonea 2a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a a 6
References
No,a A.a S.a (2004).a Ana Audita ofa Internala Controla Overa Financiala Reportinga Performeda ina
Conjunctiona witha Ana Audita ofa Financiala Statements.a AUDITING.
Sarbanes-Oxleya Sectiona 404a Aa Guidea fora Smalla Business.a SECa Emblem.a (2017,a Julya 14).a
Retrieveda Decembera 2,a 2022,a froma
https://www.sec.gov/info/smallbus/404guide/evaluation3#:~:text=Simply%20put%2C%20
a%20material%20weakness,annual%20or%20interim%20financial%20statements.a
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