Saturday, January 17, 2009

SEC Extends Deadline on Sarbox 404 Survey

Yesterday (Jan. 16) the SEC issued a press release announcing it has extended the deadline on its Sarbanes-Oxley Section 404 implementation survey. As we previously reported, the survey was originally launched in December; as announced yesterday by the SEC, the survey deadline has been extended to January 31.

The SEC is trying to gather information through the survey, and through interviews with company management, as to registrants’ views and related data on the implementation of internal control reporting under Sarbox 404 and related SEC and PCAOB rules, to determine the impact of new guidance issued by the SEC (management guidance) and PCAOB (AS5, which replaced AS2) in 2007, which were aimed at improving the cost/benefit balance and making internal control reporting more efficient and effective, as well as identifying if further improvements can be made.

Surveys are not submitted anonymously, and participation in the survey is voluntary.

Further information, including links to the survey and contact information at the SEC for related questions, can be found in the press release

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Bob said...

The SEC postponed its statiscal study, but they seem to be sinking their teeth into smaller company compliance, according to an SEC Division of Corporation Finance statement.

There is still so much confusion, even though ALL companies are required to document and assess internal control testings to support their conclusions under Section 404 (a). See SOX Frequently Asked Questions for more explanation of current requirements.

The SEC is targeting reviews of smaller public company disclosures for Management Assessment of Internal Control over financial reporting, non-accelerated filers, that had performed an evaluation and assessment for the first time.

SEC staff said, “It is the Division's view that the failure to provide this management report RENDERS THE ANNUAL REPORT MATERIALLY DEFICIENT.” They further elaborated that, “ if management DID NOT COMPLETE THE EVALUATION and provide the report as required by Item 308T(a), the company would not be timely or current in its Exchange Act reporting. This would result in the company NOT BEING ELIGIBLE TO FILE NEW FORM S-3 or FORM S-8 REGISTRATION STATEMENTS and the loss of the availability of Rule 144.”

And worse, “Because the filing of the Form 10-K constitutes the Section 10(a)(3) update for any effective Forms S-3 or S-8, THE COMPANY ALSO WOULD BE REQUIRED TO SUSPEND SALES UNDER ALREADY EFFECTIVE REGISTRATION STATEMENTS.”

For more information see CAQ Alert #2008-94

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