5. Accounts payable regulatory requirements: The accounts payable process includes regulatory requirements such as the 1099 process, Sections 302 and 404 of the Sarbanes Oxley Act of 2002, and others that may be applicable.
5.1. Sections 302 and 404 of the Sarbanes Oxley Act of 2002: Within Section 302. CEOs and CFOs must personally certify that they are responsible for disclosure controls and procedures. Each quarterly filing must contain an evaluation of the design and effectiveness of these controls. The certifying executives must state that they have disclosed to their audit committee and independent auditor any significant control deficiencies, material weaknesses, and acts of fraud. An expanded certification requirement that includes internal controls and procedures for financial reporting may also be included when the SEC issues its final rules. The accounts payable director or manager may be included in this process on a quarterly basis.
Within Section 404, the accounts payable director or manager will play a more significant role. Section 404 mandates an annual evaluation of internal controls and procedures for financial reporting. It also requires the company’s independent auditor to issue a separate report that attests to management’s assertion of the effectiveness of internal controls and procedures for financial reporting. In order to properly represent an assessment of internal controls, management accepts responsibility (written assertion) for the effectiveness of control. It is important that controls are suitably designed to achieve the objective (reliability of financial reporting) using established criteria and control objectives and related controls need to be appropriately documented. Lastly, management assesses the effectiveness of internal control over financial reporting and reports thereon (both design and operating effectiveness).