Sarbanes-Oxley Internal Controls

What this video covers

• The difference between substantive FOCUS reporting rules and the Sarbanes-Oxley Act of 2002 (SOX) internal-controls requirement: what versus how
• The formal definition of internal control over financial reporting (ICFR) and which broker-dealer systems it covers, including trade processing, position keeping, reserve formulas, net capital, and access controls
• Management's responsibility to assess and report on ICFR versus the independent auditor's responsibility to evaluate controls and report material weaknesses
• The three severity levels: control deficiency, significant deficiency, and material weakness, and which one triggers public disclosure and remediation
• The precise regulatory wording of a material weakness: a reasonable possibility that a material misstatement will not be prevented or detected on a timely basis
• Why PCAOB (Public Company Accounting Oversight Board) registration is an absolute, non-waivable threshold for broker-dealer auditors, regardless of audit quality
• How the three-part annual audit deliverable fits together: substantive FOCUS reports, SOX ICFR evaluation, then the Compliance Report or Exemption Report