SOX Center

To help CFOs of smaller companies navigate wisely through the Sarbanes-Oxley compliance process, Lord & Benoit has published a study, “10 Threats to SOX Compliance for Smaller Public Companies.”

The study comes on the heels of actions by the SEC and PCAOB to require smaller public companies to comply with SOX this year.

In summarizing the results, Lord & Benoit suggests this list should be used by CFOs as a starting point for a macro-level risk assessment at smaller public companies. Identifying potential concerns, developing action plans to remediate these risks, and taking quick action can minimize the likelihood of an adverse Section 404 report at the end of the first year of compliance.

SmartPros: Study Outlines SOX Threats for Smaller Public Companies

Chief Counsel for Advocacy Thomas M. Sullivan today commended the U.S. Senate Committee on Small Business & Entrepreneurship for holding a hearing on the impact of Section 404 of the Sarbanes-Oxley Act on smaller public companies.

In written testimony, Sullivan said, “The topic of how the Sarbanes-Oxley Act impacts small business is an important one, and the small business community will benefit by this Committee’s focus on the proposals under consideration by the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB).”

Sullivan noted that Advocacy’s involvement with the issue began in 2002 when the office asked then Chairman Oxley and Chairman Sarbanes to include flexibility in their bill sufficient to avoid unnecessary impacts on small public firms. Since then, Advocacy has issued several comment letters to the SEC and the PCAOB, held public roundtables, and given testimony before the U.S. Congress.

Yahoo!Finance: Advocacy Commends Senate Hearing on the Sarbanes-Oxley Act

Complete copy of the testimony

The Securities and Exchange Commission announced it will hold an open meeting on April 4 to discuss the Public Company Accounting Oversight Board’s proposed auditing standard for Section 404 of the Sarbanes-Oxley Act and the coordination of that proposed standard with the SEC’s related pending proposal to provide guidance for management of public companies implementing Section 404.

Both proposals were published for public comment in December 2006, and the comment periods for both proposals ended on Feb. 26, 2007.

The open meeting represents a continuation of the process announced in May 2006 by the Commission and the PCAOB to improve the reliability of financial statements public companies file with the SEC while making compliance with Section 404 more efficient and cost effective.

As part of this process, the SEC has proposed management guidance for Section 404 compliance designed to focus attention on those internal controls that present the greatest risk for a material financial misstatement. At the same time, as a companion to the proposed SEC guidance, the PCAOB has proposed a thoroughgoing revision of its existing standard for Section 404 audits.

SmartPros: SEC Schedules Open Meeting to Discuss 404 Changes

Bolstered by a series of delays granted by the SEC and highly publicized criticism of Sarbanes-Oxley legislation, many smaller companies are playing the waiting game with Section 404 compliance. With the deadline fast-approaching, smaller companies need to look beyond the hype and accept that SOX is not going away.

Rumors are circulating about the possibility of a last-minute pardon. In light of this, it makes sense to separate fact from fiction. This is especially important as the 2007 deadline for compliance draws near.

It is a fact that larger companies, so-called “large-accelerated” and “accelerated” filers, are experiencing dramatically high costs. One university study estimates that the worldwide, direct and indirect costs in the first year of enforcement cost over $1 trillion dollars. It is also fact that the SEC publicly acknowledged the extreme cost of compliance experienced by large companies and granted delays to smaller public companies (a.k.a. non-accelerated filers).

PRWeb: Small Companies Play the Sarbanes-Oxley Waiting Game

U.S. regulators expect a warm reception for changes the Securities and Exchange Commission will finalize next week making it easier for non-U.S. companies to exit U.S. securities markets.

The final rule on foreign deregistration “will make everyone happy,” SEC Corporation Finance Division Director John White said Friday in remarks to the American Bar Association.

Under the plan, non-U.S. companies would be free to leave the U.S. for good if U.S. trading in their securities is 5% or less than trading in the same securities in their home country over the previous 12 months.

Morningstar.com: SEC Deregistration Plan Seen Making ‘Everyone Happy’

Key lawmakers and regulators debated the effectiveness of the Sarbanes-Oxley anti-fraud law at a summit on American competitiveness Wednesday, with no quick fix emerging about the often criticized act.

The chairman of the House Financial Services Committee said he’s open to changing parts of the law, which requires costly accounting checks and has been roundly criticized by businesses for being expensive and time consuming.

If there are needed changes, Rep. Barney Frank said in a speech before the U.S. Chamber of Commerce, “we can go forward with that” in Congress.

But Securities and Exchange Commission Chairman Christopher Cox defended the law, saying Congress shouldn’t tinker with it.

Cox said that the SEC is working to eliminate the unnecessary costs of the law and that U.S. markets remain world leaders despite challenges from abroad.

MarketWatch: Sarbanes-Oxley fix debated at competition summit

The SEC’s five commissioners are planning to propose changes to the audit rule of the Sarbanes-Oxley Act. Widely criticized by business for being costly and time-consuming, the law’s Section 404 requires auditors to review corporations’ financial controls in order to catch potential fraud.

Opposition to the rules, which were passed by Congress in the wake of financial scandals at companies like Enron and WorldCom, has been heating up recently. Last week, a high-profile panel of chief executives and academics co-chaired by a former economic adviser to President Bush said regulations including Sarbanes-Oxley are hurting U.S. competitiveness. The Public Company Accounting Oversight Board is also scheduled to propose changes to the audit rule at a Dec. 19 meeting.

Some foreign firms have found complying with U.S. regulations including Sarbanes-Oxley to be difficult, prompting concerns about capital flight from U.S. markets. On Wednesday, the SEC will also decide on proposing new rules that would make it easier for foreign companies to withdraw from the U.S. market.

That dovetails with a recommendation made by the executives’ panel on Nov. 30. They argued foreign companies will be more willing to come to U.S. markets if they know they can leave. According to the SEC, commissioners will consider a recommendation to base deregistration thresholds solely on trading volume instead of on both volume and the percentage of U.S. holders.

MarketWatch:SEC to mull hedge-fund, Sarbanes Oxley rules

The Securities and Exchange Commission has postponed action on a pressing proxy-voting issue until Dec. 13, leaving the issue up in the air awhile longer.

The SEC announced in September that it would take up the issue at a meeting on Wednesday, Oct. 18, but in a release late Tuesday, it said the matter would be considered along with three other items on Dec. 13. The notice didn’t specify that next week’s meeting would be postponed but an SEC spokesman confirmed that Wednesday.

In addition to taking up the proxy-voting issue, the SEC said it will finalize a proposal on using Internet proxy communications and a second proposal that would make it easier for non-U.S. companies to deregister shares that trade in the U.S. SEC guidance to help corporate managers comply with the internal-control requirements of the 2002 Sarbanes-Oxley Act also will be on the agenda for the Dec. 13 meeting, according to the SEC.

SEC postpones action on proxy voting until Dec. 13