How to Comply With Sarbanes-Oxley Section 404: Assessing the Effectiveness of Internal Control

6.5. COORDINATING WITH THE INDEPENDENT AUDITORS

If the entity's independent auditors have developed a framework similar to the Internal Control Reliability Model, you should obtain it, understand it, and use it to help guide the design of your tests. In addition, you should create an ongoing dialogue with the entity's auditors to gain consensus on matters including:

• Your overall approach to testing entity-level controls, whether direct or inductive through the performance of activity-level control tests

• The nature and extent of your planned procedures and whether they are considered sufficient to draw a reliable conclusion

• The circumstances under which the planned nature and extent of the procedures should be modified

• The planned timing of your tests and whether this timing will allow you to draw conclusions about the design and operating effectiveness of entity-level controls as of year-end

• The nature and extent of procedures that may be required to update your conclusions about effectiveness from the time your procedures are performed until year-end

• The results of your tests and the tentative and final conclusions reached regarding the effectiveness of entity-level controls

• How the test procedures and results will be documented

• The general type of deviations or conditions that might be considered significant deficiencies or material weaknesses

• The implications that the identification of significant deficiencies or material weaknesses has on other aspects of the engagement