SOX 404 Exemption for Small Companies
November 9th, 2009
On November 4, 2009, the House Financial Service Committee approved an amendment which will permanently exempt small companies (non-accelerated filers) from requirements of Section 404(b) of Sarbanes-Oxley Act.
Under Section 404(b), companies are required to receive an auditor attestation on the effectiveness of their internal controls over financial reporting. The compliance requirement is particularly burdensome for small companies with market capitalization below $75 million dollars, prompting the Securities and Exchange Commission to repeatedly provide extensions to the compliance deadline for these filers since the enactment of Sarbanes-Oxley in 2002; the last and final six-month extension being granted on October 2, 2009.
The bill will have to pass in the full House and Senate, before it can be signed into law by the President. Nonetheless, non-accelerated filers will still be required to review and disclose the state of their internal controls, in accordance with Section 404(a).
Tags: amendment, exemption, non-accelerated filers, SEC, SOX 404
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