Post
I recently commented on a Compliance Week blog post regarding two amendments to delay or even rescind Section 404. One amendment will postpone Section 404(b) until 2011 for non-accelerated filers (it will be voted on again on Nov. 4.). The other amendment takes it a step further: "exempting all companies with less than $700 million in market capitalization from Section 404(b), which would include many filers already complying with it."
These types of amendments have come up from time-to-time over the past years and I always find it interesting and disturbing at the same time. The amendments are typically created by people who do not have the opportunity to see the detailed work produced by the accounting departments of the world; the work that shareholders ultimately place their reliance upon when making investing decisions.
A study performed by Compliance Week called "SOX 404 Deficiencies Preceded By "Effective" 302 Reports" by Melissa Klein Aguilar from July 26, 2005 found that of the 366 companies who received a qualified opinion through May 2, 2005, 94% of them had claimed a clean internal controls environment via their previous quarters 302 certification. My daily experiences in the detailed accounting work produced by public companies worldwide has led me to believe that these statistics are still real and will show up again once 404(b) kicks in for non-accelerated filers. The only conclusion I can draw is that SOX is not even close to overkill - in my opinion - it is reasonable and most 302 and 404(a) certifications are lip service until companies are subjected to 404(b).
Feel free to read my blog response via this link: http://www.complianceweek.com/blog/aguilar/2009/10/30/drama-intrigue-congress-and-section-404/#comment-250%0d%0a%0d%0a
By Teresa Bockwoldt MBA, MST
CEO and Co-Founder of Vibato®, LLC
Office: 415.240.4867 | Mobile: 707.477.0008 | Fax: 888.407.7725
