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What is Rule 404?

In an audit environment, when someone says “Rule 404” or “404”, then they are referring to Rule 404 of the Sarbanes-Oxley Act. It states that large-accelerated filers and accelerated filers must have their internal control environment audited by an external audit firm.

Here is the official paragraph from the AICPA website about rule 404:

“The Sarbanes-Oxley Act requires that the management of public companies assess the effectiveness of the internal control of issuers for financial reporting.  Section 404(b) requires a publicly-held company’s auditor to attest to, and report on, management’s assessment of its internal controls. “


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