The SEC on Friday announced that the smallest public companies have six more months to provide audited assessments on the effectiveness of their internal control over financial reporting.
Under section 404 of the Sarbanes-Oxley Act, public companies and their independent auditors are each required to report to the public on the effectiveness of a company’s internal controls. The smallest public companies with a public float below $75 million have been given extra time to design, implement and document these internal controls before their auditors are required to attest to the effectiveness of these controls.
The extension will expire beginning with the annual reports of companies with fiscal years ending on or after June 15, 2010. The expiration date previously had been for fiscal years ending on or after Dec. 15, 2009.
The extension was granted so the SEC’s Office of Economic Analysis could complete a study of whether additional guidance provided to company managers and auditors in 2007 was effective in reducing the costs of compliance, according to an SEC news release. Because the study was published less than three months before the Dec. 15 deadline, the Commission determined that additional time is appropriate and reasonable so small public companies and their auditors can better plan for the required auditor attestation, the release said.
“Since there will be no further Commission extensions, it is important for all public companies and their auditors to act with deliberate speed to move toward full section 404 compliance,” SEC Chairman Mary L. Schapiro said in the press release.