Plenary Lecture 6 The Valuation of Internal Control Regarding Financial Reporting in Romania - The Methodology used in Financial Auditing Practice

The financial scandals and the series of business bankruptcies - the cause of the fast decline in trust of the investors in the capital markets - impose imperatively the appliance of corporative management rules in financial controlling and reporting according to Sarbanes-Oxley Act, of national and international public accounting controlling standards related to the auditing of financial reporting internal control, and of auditing of public companies' statements. In the attempt of intensifying the sense of responsibility of corporate representatives and of restoring investors' trust in the companies' financial statements there has to be a strict responsibility delegation between executive management, legal advisors, accountants, auditors of public companies regarding internal control of financial statements, as well as the public reporting of week points in the internal control of financial reporting existing until the date of valuation. The motivation of implementing a suitable internal control of the financial statements comes from the possibility of achieving numerous investment benefits due to effort done by the company's representatives in avoiding frauds and in following an increase in periodical financial reports credibility. The Sarbanes-Oxley Act (Section 404) states demands to corporative representatives from companies regarding monitoring and consolidating their own internal control of financial reporting. In order to achieve a maximum benefit, the company's stakeholders have to be informed about these and about the implications of implementing Section 404 of the Sarbanes-Oxley Act, so that they can understand and valuate the responsibilities of public companies. In the same way, their auditors have to identify the motives and implications of week points of financial reporting internal control of the financial position and the performance of the company.