SEC Unveils Next Steps For Implementation Of Sarbanes-Oxley

by Glen Shapiro, LawAndTax-News.com, New York

22 May 2006

The US Securities and Exchange Commission last Wednesday announced a series of actions that it intends to take to improve the implementation of the Section 404 internal control requirements of the Sarbanes-Oxley Act of 2002.

The actions the Commission intends to take include issuing SEC guidance for companies and working with the Public Company Accounting Oversight Board (PCAOB) on revisions of its internal control auditing standard.

These actions are based on extensive analysis and commentary in recent months from investors, companies, auditors, and others.

The expected actions will also include SEC inspections of PCAOB efforts to improve Section 404 oversight, and a brief further postponement of the Section 404 requirements for the smallest company filers, although ultimately all public companies will be required to comply with the internal control reporting requirements of Section 404.

"The steps we are announcing today are designed to further improve the reliability of financial statements and to better protect investors while making the Section 404 process more efficient and cost effective," explained SEC Chairman Christopher Cox, continuing:

"As we go forward, we will consider the special concerns of all companies that fall under our jurisdiction -- large and small, foreign and domestic."

"By providing practical guidance to companies, by working with the Public Company Accounting Oversight Board on their forthcoming revised standard for auditors, and by examining how the PCAOB inspection process is succeeding in increasing the efficiency and cost-effectiveness of the audit process, we will take a giant step toward 'getting it right' when it comes to Section 404 compliance."

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