Final answer:
It is true that SOX Section 404 mandates companies to implement and gauge the operating efficiency of key controls for the purpose of ensuring accurate financial reporting.
Step-by-step explanation:
True, implementing key controls to determine their operating efficiency is indeed a requirement of SOX Section 404. The Sarbanes-Oxley Act (SOX) of 2002 was enacted to protect investors from the possibility of fraudulent accounting activities by corporations. Section 404 of the act requires companies to implement and report internal controls over financial reporting. This includes assessing the effectiveness of the internal control structure and procedures for financial reporting.
Under SOX Section 404, management must annually assess and report on the effectiveness of their internal control over financial reporting (ICFR). Moreover, external auditors are required to attest to the accuracy of management's assessment of these controls. This dual-requirement aims to ensure that the company's financial data is accurate and can be relied upon by investors, creditors, and other stakeholders.