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Sarbanes Oxley (SOX) Compliance Information - What is the Sarbox
Act or Sarbanes-Oxley Act?

• Sarbanes-Oxley is a US law passed in 2002 to strengthen corporate
governance and restore investor confidence. Act was sponsored by US
Senator Paul Sarbanes and US Representative Michael Oxley.
• Sarbanes-Oxley law passed in response to a number of major
corporate and accounting scandals involving prominent companies in
the United States. These scandals resulted in a loss of public trust in
accounting and reporting practices.
• Legislation is wide ranging and establishes new or enhanced standards
for all US public company Boards, Management, and public accounting
firms.
• Sarbanes-Oxley law contains 11 titles, or sections, ranging from
additional Corporate Board responsibilities to criminal penalties.
Requires Security and Exchange Commission (SEC) to implement
rulings on requirements to comply with the new law.

What does Sarbanes Oxley Address?

• Establishes new standards for Corporate Boards and Audit Committees
• Establishes new accountability standards and criminal penalties for
Corporate Management
• Establishes new independence standards for External Auditors
• Establishes a Public Company Accounting Oversight Board (PCAOB)
under the Security and Exchange Commission (SEC) to oversee public
accounting firms and issue accounting standards

no untrue facts or omissions • Establish and maintain disclosure controls and procedures as of period end and for disclosing material changes in internal control • Disclose to auditors and Audit Committee if control deficiencies. material weaknesses. CEO and CFO must: • Certify quarter and annual financial statements and other published financial information are fairly presented. Section 404 • Provide awareness training in Assessing Key Process Controls using the Sox 404 Audit Standard What does Sarbanes Oxley Section 302 Address? Sarbanes Oxley Section 302 addresses all financial information disclosed to investors including MD&A in the 10Q and 10K.Sarbanes-Oxley (SOX) Section 404 Transaction Assessment Training Who is targeted for this Sarbanes Oxley training? Individuals who will conduct SOX 404 internal control assessments Sector / Corporate Function subject matter experts • Former Financial or Systems Audit Experience • Public Accounting experience • Internal Audit experience • IT General Controls experience What are our objectives? • Provide Overview of Sarbanes Oxley Legislation and update on recently published SOX 404 Audit Standard • Communicate Our Company Plan to Address Sarbanes Oxley. or fraud exist What does Sarbanes Oxley Section 906 Address? Section 906 addresses criminal penalties for certifying a misleading or fraudulent report Under Sarbanes Oxley 906 penalties are: • Up to $5 Million in fines • Up to 20 years in jail Other sections of SOX provide additional authority to regulatory bodies and courts relating to fines or imprisonment for matters involving corporate fraud . Under SOX Section 302.

The Accounting Firm may: • Review our process documentation • Perform walk trough’s to validate controls are designed effectively . External Auditor's Sox 404 Responsibilities The Accounting Firm (External Auditor) must render two opinions: • Management's Assessment Process • Effectiveness of the company's internal controls over financial reporting The Accounting Firm must comply with Public Company Accounting Oversight Board (PCAOB) Audit Standards In order to render opinions. CEO and CFO must certify quarterly that there are no significant changes to internal controls for financial reporting using a recognized internal control framework.What does Sarbanes Oxley Section 404 Address? Section 404 is a subset of Section 302 and addresses Financial Statement Reporting controls Under 404. CEO and CFO must: • Issue Internal Control Report in 2004 Company Annual Report • Certify Quarterly as to effectiveness of Internal Controls over Financial Reporting beginning 2005 The Accounting Firm must: • Issue two opinions on internal controls over financial reporting in Company 2004 Annual Report: (1) Management's assessment process and (2) effectiveness of controls Management's Sox 404 Responsibilities • Effective Year End 2004 CEO & CFO must include a report in the Annual Report indicating: o They have designed and maintained a system of internal controls for financial reporting using a recognized internal control framework o They have tested internal controls and found them to be designed and operating effectively The Auditor has evaluated the design and effectiveness of the controls and found them to be operating effectively • Effective Q1 2005.

Management.• Review and re-perform a sample of test of controls • Perform additional independent tests • Evaluate controls to ascertain if errors of importance could occur in the financial statements or if fraud could occur Sarbanes-Oxley-SOX-404-What-would-cause-internal-controls-to- be-ineffective? • Controls are ineffective if one material weakness is identified by management and/or by Accounting Company as of the end of the fiscal year • Controls may be ineffective if a number of significant control deficiencies exist which in aggregate could lead to a material misstatement of financial statements • Examples of items potentially leading to a material weakness: o Inadequate documentation to support management's assessment o Inadequate internal controls over financial reporting • The decision on what items are a material weaknesses will be determined by Company's Disclosure Committee. and the Audit Committee . Accounting Firm.