Is management allowed to present its conclusion regarding effectiveness of internal control as a statement of “negative assurances”?
No. A negative assurances statement indicating that nothing has come to management’s attention to suggest that the company’s internal control is not effective will not be acceptable. The SEC makes clear that management must state whether or not the company’s internal control over financial reporting is effective. Must the report be placed in any specific location? No. Although no specific location is identified for management’s internal control report, the SEC does consider it important that the report be in close proximity to the corresponding attestation report issued by the auditors and expects that many companies will place the internal control report and attestation report near MD&A or immediately preceding the financial statements. Evaluation of Internal Control Who must participate in the evaluation of effectiveness? Management must perform the evaluation with the participation of the chief executive and financial officers. As of what date must the evaluation be effective? The r
