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SEC
GRANTS ADDITIONAL ONE-YEAR SOX 404 EXTENSION TO SMALL
BUSINESSES
On December 12, 2007, the Securities and Exchange Commission
announced plans to further delay deadlines, giving small
businesses one year longer to achieve initial compliance
with the Sarbanes-Oxley Act of 2002 (SOX).
The announcement allows companies with fiscal years
ending after December 15, 2008 - the previous deadline
- until December 15, 2009 to comply with Section 404
laws. An additional section requiring assessment of
controls by management is not affected.
Citing disproportionately high costs and complexities
for small businesses, the SEC has postponed new compliance
requirements to allow time for a review of a new study
of costs and feasibility. Small companies – those
with an equity float of less than $75 million dollars
– already face higher cost per employee ratios
for audit and compliance issues, with SOX compliance
costs as high as three percent of income.
SEC Chairman Christopher Cox cited “an abiding
concern for America’s smaller companies”
last month in a testimony before the U.S. House of Representatives
Committee on Small Business. The postponed deadlines
are designed to allow appropriate time for the SEC to
evaluate the costs of compliance and the benefits applicable
to small businesses resulting from the Section 404 rulings
and the Public Company Accounting Oversight Board’s
new Auditing Standard Number 5 (AS5).
SOX 404 compliance has been seen to have a positive
impact on the quality of financial reporting for small
businesses after implementation. Additionally, thorough
compliance can address internal control weaknesses and
reduce the occurrence of fraud.
To ensure adequate and timely preparation before for
the 2009 deadlines, it is important for managers to
assess corporate needs and seek expert advice to minimize
compliance burden. Managers should act now to take the
necessary steps to ensure efficient and effective compliance.
For assistance in planning an efficient compliance process,
please contact:
Renee
Pendleton
Partner, Audit & Risk Management Group
rpendleton@cbh.com
757.228.7078
Tim Sidow
Manager, Audit & Risk Management Group
tsidow@cbh.com
757.228.7069
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About Cherry, Bekaert & Holland, L.L.P.
As the Southeast’s accounting
and consulting Firm of Choice, Cherry, Bekaert & Holland,
L.L.P. (CB&H) is uniquely positioned to provide quality,
cost-effective and value-added services to a diverse and
successful client base. The Firm sets itself apart by
delivering the extensive industry specialization and service
opportunities of a national firm, but with the accessibility,
service continuity and level of personal relationship
expected from a local business. Ranked nationally among
CPA firms, CB&H’s resource network stretches
regionally across six states, including the large metro
markets of Atlanta, Charlotte, Hampton Roads, Raleigh,
Richmond, Tampa and Washington D.C., and nationally and
internationally through an alliance with Baker Tilly International,
a worldwide network of independent accounting firms.
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