CEO

CFO

CDO

CRO

CICO

Public companies with more than $10 million of assets whose shares are held

by more than 500 investors are required to file auditor’s annual reports (Form

10-K or 10-KSB) and quarterly reviewed reports (Form 10-Q or 10-QSB) with

the SEC.

The annual report of public companies normally contains the following

financial information:

1. Audited financial statements, including their notes

2. MD&A of financial condition and results of operations

3. Management certifications of financial statements and internal

controls

4. Management’s assessment of the effectiveness of ICFR

5. ACR

6. Independent auditor’s report on financial statements

7. Independent auditor’s report on the effectiveness of ICFR

8. Five-year summary of selected financial data

9. Summary of selected quarterly financial data for the past two years

10. Quarterly market data for the past two years, including high and low

stock prices for common stock, dividends paid, and price earnings ratio.

Section 302

Small Reporting Companies

The SEC proposed its principles-based rules for smaller

companies for so-called nonaccelerated filers — companies

below the $75 million market capitalization.

Section 404 Costs

the actual cost of auditing ICFR is in the range of $1.5 million to $10 million, with an

average of $2.6 million for Fortune 1000 companies

Benefits of Section 404 Compliance

The expected benefits of compliance with Section 404 are (1) more investor

confidence in financial reports, (2) more accurate and reliable financial reports, (3)

more financial fraud prevention and detection, (4) more effective ICFR that

improves operating, investing, and financing activities, and (5) lower cost of

capital.

Sustainable Section 404 Compliance companies should shift away from a project approach to a continuous process of

integrating sustainable compliance into

their corporate governance structure.