The Securities and Exchange Commission recently approved a one-year extension of the compliance
date for smaller public companies to meet the auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act
(SOX), meaning that smaller companies will be required to start providing an attestation report in their annual reports in
fiscal years ending on or after December 19, 2009. Additionally, the commission also announced that it had secured approval
from the Office of Management and Budget (OMB) to begin collecting data for an analysis of the costs and benefits of the implementation
of Section 404 and the consequences that compliance may have for smaller companies.
An extension in the compliance date
has been championed by congressional small business leaders and regulators alike, with SEC Chairman Christopher Cox first
discussing the one-year delay in late 2007 and formally proposing it before the House Small Business Committee in early 2008.
The cost-benefit study was first announced in February and is being led by the SEC's office of economic analysis with
assistance from the office of the chief accountant and the division of corporate finance. The study will include interviews
and a web-based survey in an effort to collect real-world data from a number of smaller companies to determine what about
Section 404's requirements drive compliance costs upward.
"Over the past few years, the commission and Public
Company Accounting Oversight Board (PCAOB) have committed extensive resources to improving the efficiency and cost-effectiveness
of the implementation of Section 404's requirements, particularly for smaller companies," said John White, director
of the SEC's division of corporate finance. "I am optimistic that this study of real-world data will help further
inform our efforts to improve the implementation of SOX 404."
Results of the survey are expected to be available
before the new delayed compliance date.
Jacob Barron, NACM staff writer
