SEC plans for improved SOx 404 implementation

  • SEC (US Securities and Exchange Commission) (dark gray) Image

22 May 2006

The US Securities and Exchange Commission has announced a series of actions it intends to take to improve the implementation of the Section 404 internal control requirements of the Sarbanes-Oxley Act of 2002. Those actions include: Guidance for companies. The guidance would assist management in its performance of a top-down, risk-based assessment of internal control over financial reporting.

To ensure that this guidance is of help to non-accelerated filers and smaller public companies, the Commission intends that this future guidance will be scalable and responsive to their individual circumstances. The guidance will also be sensitive to the fact that many companies have already invested substantial resources to establish and document programs and procedures to perform their assessments over the last few years. The form of the guidance has yet to be determined. Public comment will be invited.
  • Revisions to PCAOB Auditing Standard No. 2. AS 2 addresses An Audit of Internal Control Over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.
  • SEC oversight of PCAOB's programme for inspecting auditing firms.
  • Extension of compliance for non-accelerated filers. To permit non-accelerated filers and their auditors to have the benefit of the management guidance that the SEC intends to issue, and to have the opportunity to evaluate and implement the revisions that the PCAOB plans to make to AS No. 2, the Commission expects to issue a short postponement of the effective date of the Commission's rules implementing Section 404 for non-accelerated filers. All filers would be expected to comply with the management assessment of internal controls required by Section 404(a) of Sarbanes-Oxley for fiscal years beginning on or after Dec. 16, 2006.
  • Click for (PDF 82k).

    Correction list for hyphenation

    These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.