From the Center for Audit Quality (CAQ):
The Center for Audit Quality (CAQ) today submitted a comment letter in response to the U.S. Securities and Exchange Commission’s (SEC) request for comment related to how the SEC could reduce the burden of complying with Section 404(b) of the Sarbanes-Oxley Act of 2002 for companies whose public float is between $75 million and $250 million, while maintaining investor protections for such companies.
Writing that investors and issuers have benefitted from auditor attestation on internal controls over financial reporting (ICFR) in accordance with Section 404(b), CAQ Executive Director Cindy Fornelli stated that, “…we believe that auditor attestation of ICFR has, among other things, enhanced the reliability of financial statements, resulted in lower rates of restatements compared to those issuers that are not required to comply, increased the accountability of individuals involved in the financial reporting process, resulted in better corporate governance practices, and enhanced investor confidence.”
The letter also offers some recommendations that the CAQ believes could further enhance the efficiency of Sections 404(a) and 404(b) implementation, while still preserving the effectiveness of implementation and the fundamental investor protections of Section 404. These fall under the headings of PCAOB Insights, Issuer Forums on Internal Control, and Update of COSO‘s Internal Control – Integrated Framework.
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