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SEC will simplify implementation of SOx Section 404

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

06 Apr 2007

The US Securities and Exchange Commission has endorsed a number of steps designed to make the internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002 "more efficient and cost effective".

Steps the Commission has agreed to take include:
  • Swift consideration of the PCAOB's new auditing standard AS-5 when the PCAOB submits it to the SEC in the coming weeks (currently this is Proposed Auditing Standard An Audit of Internal Control Over Financial Reporting that Is Integrated with an Audit of Financial Statements)
  • Aligning the SEC's proposed new management guidance under Section 404 with the new AS-5
  • Scaling the 404 audit to account for the particular facts and circumstances of companies, particularly smaller companies
  • Encouraging auditors to use professional judgment in the 404 process, particularly in using risk-assessment; and
  • Following a principles-based approach to determining when and to what extent the auditor can use the work of others.
Click for SEC Press Release (PDF 31k).

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