SOX Center

Two separate oversight bodies responsible for financial reporting and auditing rules under the Sarbanes-Oxley Act (SOX)–the Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board–took steps in late May to streamline and clarify the act’s requirements.

On May 23, the SEC approved new guidelines for interpreting section 404 of SOX, instructing companies to focus their controls on those issues that present the greatest risk of affecting their financial reporting. According to the SEC, those changes will allow companies to eliminate unnecessary controls while tailoring their efforts.

On May 24, the Accounting Oversight Board, which reports to the SEC, approved a new standard for outside auditors that mirrors the SEC guidance approved the day before. The new framework, known as Auditing Standard No. 5, directs these outside firms to take a risk-based approach in determining what aspects of a business must be included in their audits. The new standard must now go to the SEC for final approval.

CRN.com: SOX Appeal