R5 SOX 2002

The Sarbanes-Oxley Act of 2002 requires that the management report on internal control include

Financial statement disclosures include management's assumption of responsibility for internal control, management's assessment of internal control effectiveness and a statement that the auditor has reported on management's evaluation.

The financial expert must have an understanding of

GAAP and financial statements, be able to assess the application of accounting principles, have comparable experience applying accounting principles to entities that present a similar level of complexity of the issuer, and understand both internal controls and audit committee functions.

The primary benefit of having a financial expert on a company's audit committee is:

The benefits of a financial expert on the audit committee relate to the expertise that the board can bring to its oversight function.

The Sarbanes-Oxley Act addresses the problems related to inadequate board oversight by requiring public companies to have an:

established audit committee comprised of board members who are otherwise independent of the company

Sarbanes-Oxley requires that an issuer's audit committee have at least one

financial expert, or disclose why that role is not filled.

The lead audit or coordinating partner and the reviewing partner must rotate off the audit every

five years.

Issuers are generally prohibited from making

personal loans to directors or executive officers under the Sarbanes-Oxley Act of 2002. Exceptions exist for loans made in the ordinary course of business.

Registered public accounting firms are required to maintain audit work papers and supporting documentation for a period of

seven years.

Sarbanes-Oxley requires that the audit committee's financial expert understand the application of accounting principles to the issues representative of the complexity of the issuer but does not require

specific experience in the industry.

The issues surrounding risk and growth are significant to investors and generally addressed by enterprise risk management concepts; however, the Sarbanes-Oxley Act focuses less on

strategic operations and more on the financial reporting issues impacted by the audit committee's competence, the ethical behavior of senior officers and the adequacy of internal controls.

To participate in the preparation of audit reports for a company registered with the SEC, a CPA firm must first register with

the Public Company Accounting Oversight Board (PCAOB)