The Securities and Exchange Commission adopted a rule this week requiring corporate executives -- and their accountants -- to note in annual reports whether companies have proper internal controls in place to prevent financial wrongdoing.
In a unanimous vote (5-0), the commissioners made it clear that chief executives must attest to the effectiveness of their companies' internal controls and procedures for reliable financial reporting. It also forces outside auditors to attest to the adequacy of the internal controls.
The AICPA applauded the move, but noted that the Public Company Accounting Oversight Board needs to quickly offer guidance to the profession on how to assess a company’s evaluation of internal controls.
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