How to Comply With Sarbanes-Oxley Section 404: Assessing the Effectiveness of Internal Control

6.8. Appendix 6C Example Inquiries Of Management Regarding Entity-Level Controls

6.8.1. Instructions for Use

This form is designed to be used by an interviewer in face-to-face interviews with members of management. The form consists of example questions, organized according to control objective. At the conclusion of each section, you will be asked to document your initial evaluation of the results of the conversation.

6.8.2. Example Questions

Most of the example questions are relatively objective and focus on the actions taken by management. They are intended as a way to introduce the subject matter in a relatively nonthreatening way. Follow-up questions should be asked to develop an impression of the respondent's awareness, understanding, and attitude toward the subject. Since these questions will depend primarily on the responses the individual gives to the initial question, the form (see Exhibit 6C.1) includes only a limited number of follow-up questions. Appendix 5.B includes a list of example control objectives and related control policies. These examples can be helpful in formulating potential follow-up questions.

6.8.3. Evaluating Responses

Your interview should be sufficient to allow you to form an initial impression about the effectiveness of the entity-level control policy. The form uses an abbreviated version of the Internal Control Reliability Model introduced in this chapter. Based on your interview, you should evaluate the policy according to this scale:

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