Presented by:Saravanan Velrajan

Daisy Mae GoAllan Phan

Parvathi Natarajan

Acc/539Richie Wong

Scope Major provisions of SOA Regulations and authorities in guiding SOA Kla- Tencor in compliance with SOA Methodologies in use to comply with SOA Pain points in compliance with SOA Conclusion

To perform a comprehensive examination of the processes and controls used to safeguard assets, conduct business, and report results.

To ensure that KLA-Tencor satisfies all of the requirements imposed by US legislation.

Certification of financial reports by CEOs and CFOs Ban on personal loans to any Executive Officer and Director Accelerated reporting of trades by insidersIndependent annual audit reports on the existence and condition of internal controls Must have an internal audit function

Pre-approval Requirements (Section 202) All auditing services should be pre-approved by

audit committee of the issuer

Management Assessment of Internal Controls (Section 404) Annual reports should include report by management on

company’s internal control over financial reporting

Cash/ST InvestmentsReceivablesInventoriesOther Current

Current Assets

Plant and EquipmentOther

Total Assets

DebtEquity

DSO’s = 77 days

No Long Term Debt

Prod. Turns = 3.1

Mar ‘05

Unusual Liquidity, Cash Generator

$2,108445354361

$3,268

$393299

$3,960

$0$2,975

Sep ‘04 Dec ‘04

$1,886366373345

$2,970

$380239

$3,590

$0$2,685

$1,925446351343

$3,065

$398303

$3,766

$0$2,838

Wafer Inspection2365, 2371, AIT XUV, SP2, eS31, 2430, Klarity Defect/ACE/SSA

PhotomaskSL3UV, TeraStar, TeraScan

ServiceiSupport

MetrologySpectraFx 200, eCD-2, SpectraCD 100, MetriX 100, Archer AIM, Quantox XP, RS-100, HRP-240/340, P-15, AS-IQ, PROLITH, ProDATA

Data StorageWafer, Head, and Media Test Products

Complete extensive documentation of controls

Controls are working as documented

Maintain required evidence that the controls are being performed

Mega Process

Audit Testing (Two test phases)

Internal control

Revenue cycle is key control process, anti-fraud assessment target

SEC Enforcement Action on Fraud and irregularities

Revenue process testing goes beyond Finance function

R&D

SG&A

0

5

10

15

20

25

30

35

40

45

50Percent

1Q03

40%

36%

45%

35% 34%

1Q002Q003Q004Q001Q01 2Q01

29%

3Q01

SAB101

29%

4Q01

33%

38%

1Q02

31%

2Q02

36%

39%

3Q02

38%

4Q02

35%

41%

2Q033Q03

40%

4Q03

40%

1Q04

39%

2Q04

34%

3Q04

31%

4Q04

28%

1Q05

30%

2Q05

30.5%

3Q05

Percent

0

10

20

30

40

50

60

48.9%50.1%

53.6%56.1%57.1%

52.2%

2Q031Q00 2Q00 3Q00 4Q00 1Q01

56.9%

2Q01

56.4%

3Q01

55.3%

4Q01

SAB101

51.4%

1Q02

50.1%

2Q02 3Q02

49.0%50.1%

4Q02

50.4%

1Q03

48.5%

3Q03

49.0%

4Q03

51.1%

1Q04

53.8%

2Q04

56.2%

3Q04

58.4%

4Q04

58.5%

1Q05

59.1%

2Q05

59.0%

3Q05

CEOs and CFOs must certify their financial statements on a quarterly and annual basis under Section 302 of SOA

Require to certify the effectiveness of their internal controls on a quarterly and annual basis under Section 404 of SOA

Tighter SEC filings deadlines for 10-Ks,10-Qs, and 8-Ks

Real-Time Disclosure

Sarbanes-Oxley was signed into law on July 30, 2002 in response to corporate scandals CEO/CFO Sign-off Internal Controls Accelerated Filings Real-Time Disclosure