Year end processes 208
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I am consulting with a company and an interesting question arose about testing year-end or annual processes. Is it considered OK to have year-end processes tested in Q1 of 2005, even though the compliance date is 12/31/2004? I have heard that some companies are doing ‘dry runs’ for y/e at 3Q. Any experience on this one? Suggestions
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I believe you can test up to the audit report date which is typically February 2005
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The controls can be tested any time prior to filing your 10K. The advanteage to early testing is having time to remediate any deficient controls. We are actually testing the year-end-only processes and controls based on 2003 year end as a baseline and then will test in January 2005 for 2004 YE assertions.
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External auditors are specifically prohibited from placing reliance on management’s tests (ie internal audit tests) of procedures related to the period end financial reporting process. So if you think they are working Ok and unlikley to need any remediation don’t waste time testing them for SOX.
You may of course wish to test them as part of other internal audit work.