As indicated in the chapter, if an observation, or a group of observations, is assessed to be material, communication must be formal and include senior management, the organization's independent outside auditor, and the audit committee. Additionally, for publicly owned companies over a specified size and if the observation concerns internal control over financial reporting and disclosure controls and procedures, the U.S. Sarbanes-Oxley Act of 2002 and financial reporting regulations in other countries require management to qualify their opinion on internal control over financial reporting (and disclosure controls and procedures) and formulate a remediation plan to correct the weakness identified in the controls in question. Management must continue to qualify its opinion on internal control over financial reporting (and disclosure controls and procedures) until the material weakness (observation) is remediated and management has verified through control retesting that the control in question is designed adequately and operating effectively. If management determines it is necessary to qualify its opinion on internal control over financial reporting (and disclosure controls and procedures), this fact must be reported to its stakeholders according to the laws of the country in which it operates. Utilize the KnowledgeLeader website and perform the following:
A. Authenticate to the KnowledgeLeader website using your username and password.
B. Perform research and determine the reporting requirements for a publicly traded company that has identified a material weakness related to internal control over financial reporting (and disclosure controls and procedures). Identify the various types of control weaknesses as defined by Section 404 of the Sarbanes-Oxley Act. Identify the required disclosures and provide an example of management's report and the independent outside auditor's report provided to the company's shareholders (this will require research outside of KnowledgeLeader).
C. Submit a brief write-up indicating the results of your research to your instructor.