According to media reports, many companies in the United States are finding it hard to meet the deadlines laid out under the 2002 Sarbanes-Oxley corporate governance legislation.
Reporting on the matter this week, UK technology news service Vnunet.com revealed that some firms have less than 75 days to bring themselves into compliance.
Under the terms of Sarbanes-Oxley, a public company with more than $75 million in market capitalisation which ends its financial year on or later than November 15 must ensure that it is in compliance with Section 404 of the corporate governance act within 75 days of its year-end.
Section 404 requires a firm's auditor to identify material internal control weaknesses or "significant deficiencies" in the management's ability to produce accurate financial reports.
According to Vnunet, however, some 300 US companies have so far told the Securities and Exchange Commission that they will be in violation of Section 404 as a result of weaknesses in their internal control systems.
Smaller US firms and overseas companies with US listings will need to bring themselves into compliance with the rules by the time they file their 2005 annual reports.
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