Question

Does it matter that Groupon reported its weakness in internal controls as a disclosure control under SOX Section 302 rather than pointing it out in its report on internal controls under Section 404

Answer 1

Answer:

It matters as section 302 is specifically meant for the CFO and the CEO to attest to fairness of financial statement and effectiveness of internal controls system

Explanation:

Section 404 is for the management to itemize internal control lapses in the course of the year.

It is not entirely out of context to  report such deficiency under section 302 but it must have first of all be  pointed out under section 404 of the SOX act

Since SOX act is mostly  rules-based approach to corporate governance framework, it is expected that its provisions be adhered to strictly.

Answer 2

Yes, It is important because section 302 requires the CFO and CEO to attest to the financial statement's fairness and the effectiveness of the internal controls system (ICS).

What is the purpose of SOX, Section 302 and 404?

The purpose of Section 404 is for management to quantify internal control failures throughout the year.

Reporting such a deficit under section 302 is not wholly out of context, but it must first be mentioned under section 404 of the SOX legislation.

Because the SOX Act is primarily a rules-based approach to corporate governance, it is required that its provisions be scrupulously followed.

For more information about SOX and Section 302, 404, refer below

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