assessment of the effectiveness of internal control over financial reporting must be supported by evidential matter, including documentation, regarding both:

• design of internal controls, and
• the testing processes

This evidential matter should provide reasonable support for:

• the evaluation of whether the control is designed to prevent or detect material misstatements or omissions;
• the conclusion that the tests were appropriately planned and performed; and that
• the results of the tests were appropriately considered

The public accounting firm that is required to attest to, and report on, management's assessment of the effectiveness of the company's internal control over financial reporting also will require that the company develop and maintain such evidential matter to support management's assessment

The SEC final rule on Internal Control specify that management must base its evaluation of the effectiveness of the company's internal control over financial reporting on a suitable, recognized control framework that is established by a body or group that has followed due-process procedures, including the broad distribution of the framework for public

COSO Framework satisfies the SEC criteria and may be used as an evaluation framework for purposes of management's annual internal control evaluation and disclosure requirements.

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Last modified: February 19, 2007