What role does documentation play in the CEO/CFO certification of internal control over financial reporting?
Documentation is important. It is a key element in a company’s assertion that they have a system of internal control over financial reporting in place. It assists management in certifying on the design of internal controls. It also provides a foundation for the development of test plans which facilitate the assessment of operational effectiveness. Documentation also assists a company in evidencing that they have designed effective internal controls. Without documentation, CEOs and CFOs cannot demonstrate a clear understanding of the activities that are being undertaken to meet control objectives — which means they also don’t know if there are control gaps. Is there a documentation process companies should follow? The documentation process is most effectively executed through a combination of interviews and often a walk-through of key control activities to understand and confirm the design of internal controls. It is also important to understand whether there is existing documentation t
