SOX Center

The U.S. Securities and Exchange Commission approved new guidance on Wednesday to help companies comply with what critics say is a burdensome and costly provision of the Sarbanes-Oxley corporate reform law.

The agency, by a 5-0 vote, encouraged companies to take a more risk-based approach to complying with Section 404 of the legislation.

“Congress never intended that the 404 process should become inflexible, burdensome and wasteful,” SEC Chairman Christopher Cox said at the agency’s open meeting.

Section 404 requires companies to assess their internal controls over financial reporting. It also calls for external auditors to report on management’s assessment and on the controls themselves.

Corporations and business lobbyists have complained that Section 404 was too expensive and the SEC has conceded that, in some cases, overly cautious companies caused the law’s costs to exceed its benefits.

Yahoo!Finance: SEC adopts new guidance for Sarbanes-Oxley

Several of the North Bay’s publicly traded companies will soon have to comply for the first time with the stringent accounting requirements of the federal Sarbanes-Oxley Act.

The Securities and Exchange Commission is still revising those requirements, and the companies face the dilemma of whether to prepare now using the current requirements or wait for the revisions, which are expected to ease the act’s burden on small companies.

Congress passed Sarbanes-Oxley in 2002 in response to accounting scandals at Enron Corp. and other companies, but since then smaller firms have been arguing that the act is too costly for companies without large accounting staffs.

North Bay Business Journal: Sarbanes-Oxley deadline approaches

The new world of corporate governance, in the view of Securities and Exchange Commissioner Roel Campos, is one in which Sarbanes-Oxley rules governing companies become more commonplace and affordable as shareholders continue to demand and receive more say over how companies are run.

“It’s what I see,” Campos said of the democratization trend with shareholders in a speech to the Philadelphia Chapter of the National Association of Corporate Directors Tuesday. “I don’t think there’s anything to fear. It’s here to stay. Activists are going to be involved and try to influence decision-making.”

He outlined what he saw as growing opposition to staggered boards and poison pills, which make companies more resistant to takeover bids. He also expects to see more companies move to majority voting on boards, rather than the plurality that is now the standard, requiring only that a director get more shareholder votes than others to be elected.

Business Journal: SEC commissioner: Shareholder rights activism ‘here to stay’

The Securities and Exchange Commission on Wednesday threw its weight behind finalising fresh guidelines aimed at clarifying how companies and auditors should comply with the Sarbanes-Oxley law.

The move signals that work by the US authorities to ease the burden of compliance with the 2002 law is moving into its final stage three months after proposed revisions were first floated.

At issue is how the SEC’s new guidelines for company management on implementing the law’s Section 404 internal controls provisions can be more closely aligned with separate guidance for auditors issued by the Public Company Accounting Oversight Board (PCAOB).

There is also disagreement over the extent to which external auditors should rely on a company’s own reviews of its controls.

This is testing US regulators’ willingness to adopt a more flexible, “principles-based” approach to corporate controls than those prescribed under Sarbox.

FT.com: SEC pushes clearer Sarbox guidelines

BIO Reiterates Support as Senate Small Business Committee Considers Changes

WASHINGTON–(BUSINESS WIRE)–As Securities and Exchange Commission (SEC) Chairman Christopher Cox and Public Companies Accounting Oversight Board (PCAOB) Chairman Mark Olsen prepare to testify before the Senate Committee on Small Business & Entrepreneurship today, BIO reiterated its support for changes to the Sarbanes-Oxley Act of 2002 (SOX) that will specifically benefit small biotech companies.

“The biotechnology industry was particularly hard-hit by the complex and burdensome regulations imposed by SOX’s Section 404. We have supported changes to its implementation, so our companies can refocus on our most important mission of researching and developing new therapies to improve human health, expand our food supply, and provide new sources of energy,” said BIO President and CEO Jim Greenwood. “We are pleased to see that agency and congressional leaders are listening.”

Yahoo!Finance: Biotech Research and Development Will Benefit from Sarbanes-Oxley Changes

New chief accountant named for SEC’s division of investment management

Richard F. Sennett has been named chief accountant of the Securities and Exchange Commission’s division of investment management.

He will have primary responsibility for oversight of the financial reporting and accounting practices of registered investment companies.

According to the SEC, he was instrumental in the development and implementation of the division’s Sarbanes-Oxley annual report review process.

AccountancyAge: Sarbox man gets chief accountant role at SEC

Nicor Inc. (NYSE:GAS) today announced that it has reached a settlement agreement with the United States Securities and Exchange Commission (”SEC”) resolving charges filed today against the company in connection with the SEC’s investigation of the results of the company. The company had announced in 2002 that the SEC had begun a formal investigation in connection with the accounting for natural gas costs pursuant to the Performance-Based Rate plan, which was in effect from 2000 to 2002 at Nicor Gas Company, the company’s gas distribution subsidiary.

Under the settlement, Nicor has agreed, without admitting or denying any wrongdoing, not to violate in the future provisions of the United States securities laws. The settlement also requires the company to pay disgorgement of one dollar and a penalty of $10 million, a portion of which may be designated for use for a Fair Fund, as authorized under the Sarbanes-Oxley Act. As previously announced, Nicor recorded a charge of $10 million to its 2006 second quarter earnings in connection with the penalty to be paid to the SEC.

Morningstar.com: United States Securities and Exchange Commission Approves Nicor Settlement

The Securities and Exchange Commission can now nominate its own candidates for the Financial Accounting Standards Board.

Under an agreement between the Securities and Exchange Commission and the parent foundation of the Financial Accounting Standards Board, the SEC will have more authority over the appointment of members of the private board, The Wall Street Journal reported Wednesday.

In a two-page memo sent to the SEC on March 9, FASB’s parent unit, the Financial Accounting Foundation, agreed with the commission that the FAF and FASB should generally notify the SEC 45 days before but no less than 30 days before the FAF nominates foundation or FASB members, according to the newspaper. The foundation also reportedly agreed to follow a set schedule for telling the SEC about potential appointments and reappointments to FASB and to the FAF board.

FAF also signed off on giving the SEC the chance to nominate its own candidates and to notify the SEC of finalists for any position, according to the Journal story. The agreement will also allow commissioners to interview nominees, the newspaper reported, citing a copy of the memo provided to it by FAF.

CFO.com: Report: SEC Grabs More Power over FASB

The Securities and Exchange Commission will make it easier for foreign companies to delist from U.S. stock exchanges and withdraw from SEC oversight, including the requirements of the Sarbanes-Oxley law.

A new SEC regulation, approved today, will allow companies to deregister their shares if U.S. trading is 5 percent or less of the firm’s daily volume worldwide. The rules will take effect before a June deadline for complying with Sarbanes-Oxley’s audit requirements, regulators said.

Bloomberg: SEC to Allow Companies to Withdraw From U.S. Listings

The U.S. Chamber of Commerce has launched a new center dedicated to lobbying Congress to ease Sarbanes-Oxley requirements and “strengthen the competitiveness of U.S. capital markets.”

The Center for Capital Markets Competitiveness (CCMC) was announced last week during the Chamber’s Capital Market Summit.

The Chamber represents 3 million businesses and wants to see the rules relaxed, but its summit Securities and Exchange Commission Chairman Cox said he opposes weakening the law.

“We don’t need to change the law,” Cox said. “We need to change the way it is implemented.”

In a statement, the Chamber said the new center will address domestic and international securities regulation, as well as challenges to the auditing profession, proxy rules, business due process, and a host of other issues.

SmartPros: U.S. Chamber Launches New Center