Definition

ICFR

ICFR, or internal control over financial reporting, is the system of processes a company relies on to produce financial statements that are accurate and prepared according to the applicable accounting rules. It covers how transactions are recorded, how assets are safeguarded, and how the numbers are reviewed before they reach investors. Under SOX Section 404, management must evaluate ICFR each year and disclose any material weakness that could let a significant error slip through. Auditors then test the controls that matter most to the financial statements. Effective ICFR does not guarantee perfection, but it makes a serious misstatement far less likely to go unnoticed.