SEC gives corporates some SOx breathing space
Many US corporates will be breathing a sigh of relief after the announcement by the US Securities and Exchange Commission (SEC) that it will grant certain companies an extra 45 days to submit reports on their internal controls. At present companies are obliged to submit annual reports to the SEC within 75 days after the end of the fiscal year. Section 404 of Sarbanes-Oxley requires that these annual reports include a management assessment on internal controls over financial reporting, as well as the related auditor's report on the management's assessment.
Companies that qualify for the extension are those with a fiscal year ending between and November 15 2004 and February 28 2005, and with market capitalization of between $75 million and $700 million.
All other information required in annual reports, such as audited financial statements still have to be submitted on the original date.
Alan Beller, director of corporate finance at the SEC, says: ?This exemption will encourage companies to file important information for investors, including audited financial statements, on a timely basis, while providing an appropriate accommodation for internal control reports.?
The SEC says it has become aware of the resource constraints at accounting firms and smaller public companies and thinks an extension of the deadline for the reporting of internal controls will better enable them to implement the internal control requirements.