The Sarbanes-Oxley Law

Our “Cemig-SOX Project” was put in place to certify the system of internal controls related to preparation of the financial statements, and the procedures for disclosing the company’s information and material announcements in accordance with the requirements of the SEC.

This involved intense activity starting in January 2006, with 40 employees from various areas of the company allocated full-time, and support from outside consultants.

Analysis of our consolidated balance sheet and the matrix of risks identified 25 significant processes related to the consolidated financial statements. We initially selected 950 controls, of which 450 were classified as key controls, able to provide a reasonable degree of certainty that the financial statements of the company and its subsidiaries are recorded, processed and disclosed in accordance with the rules, periods and format stipulated by the SEC.

This work led to a review and revision of material processes, and validation of the design of the internal controls related to the consolidated financial statements. We found that in the majority of the processes analyzed the internal control procedures already adopted by the company did show themselves to be efficacious after application of auditing tests, and this enabled the Executive Board to issue a report concluding in favor of the efficacy of the internal controls.