SOX Center

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

A Businessman Who Keeps the Books

For thousands of investors and executives at publicly traded companies, Conrad W. Hewitt may be one of the most important Washington civil servants they’ve never heard of.

The chief accounting guru at the Securities and Exchange Commission, Hewitt stands at the center of numerous burning policy debates — from how far to cut back on corporate reforms imposed after the Enron debacle to which executives are to get punished for manipulating their companies’ numbers.

Hewitt, 70, came to the job last August in the twilight of a long career as a California banking regulator and a partner at Ernst & Young, one of the nation’s four largest accounting firms. “I thought it was a great opportunity to cap my career,” he said.

But the major influence on Hewitt’s thinking may be his service as a board member at 10 companies, many of which spent millions of dollars complying with costly provisions in the 2002 Sarbanes-Oxley Act which imposed financial and governance strictures on businesses and their accountants. One of his associates back then called the process “an exercise in futility.”

WashingtonPost.com:A Businessman Who Keeps the Books

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

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’

Comments about proposed changes to the controversial Sarbanes-Oxley law rolled in for a final day Monday, as debate about how best to implement it continued.

Monday marked the closing of the comment period for rules proposed in December by the Securities and Exchange Commission and the Public Company Accounting Oversight Board that aim to streamline Section 404 of the 2002 corporate-governance law. The section requires both management and outside auditors to sign off on a company’s internal financial controls.

But some commentators said the auditing provision could be tweaked even further.

“The rules and standards related to the implementation of Section 404 of the act still require significant attention,” said Grace Hinchman, senior vice president of government affairs for Financial Executives International, in a statement. The group is suggesting changes including allowing for “rotational” testing of controls that have operated effectively in the past.

MarketWatch: Further tweaks urged for Sarbanes-Oxley

Today Senators John Kerry (D-Mass.) and Olympia J. Snowe (R-Maine) called for a delayed implementation of the Sarbanes-Oxley Section 404 requirements for small public firms to ease the burden on complying with the expected new auditing standards. Section 404 requires firms to establish internal control frameworks and to file internal control reports. The Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) proposed rules and guidance late last year addressing this section and are accepting public comments through Monday, February 26th.

“We can have strong corporate accountability standards while also reducing the burden for small firms who spend more time and money earned than big companies to comply with Sarbanes-Oxley,” said Kerry. “We must do everything possible to appropriately reduce red tape in order for small firms to grow and become dynamic public companies.”

Yahoo!: Kerry, Snowe Urge Sarbanes-Oxley Extension for Small Firms