SOX 404(b): What does the Wall Street Reform Act mean for Non-Accelerated Filers?

Posted by Teresa Bockwoldt on July 26, 2010

Here at Vibato, we were recently questioned about what the Wall Street Reform Act means for non-accelerated filers with June 30th year-ends. Some lawyers have been claiming that the Wall Street Reform Act will be retroactively applied to these companies, so we contacted the SEC about the issue.

Through speaking with members of the SEC, we found that SOX 404(b) exemption will not be retroactively applied to non-accelerated filers with a June 30th year end. However, what really matters for non-accelerated filers is the date that they file(d) their Form 10K as per Rule 12b-10. If the non-accelerated filer filed their 10K form before 21 July 2010 (the date the President signed the Wall Street Reform Act), then they must comply with SOX 404(b). If they file their 10K form after 21 July 2010, they do not have to comply with SOX 404(b). So for non-accelerated files with a June 30 year end, the real question is when was/will their Form 10K be filed. This determines whether or not their 10K form must be compliant with SOX 404(b).

In simplest terms, when you make a Form 10K filing, you must comply with the laws in place at the time of your filing, even if the law changes after your filing.


From the AICPA:

The Act exempts non-accelerated filers from compliance with SOX Section 404(b) requirements which relate to the independent auditor's attestation on the effectiveness of issuer's internal control over financial reporting.  Without this exemption, non-accelerated filers would have had to comply with SOX Section 404(b) beginning with their annual reports for fiscal years ending on or after June 15, 2010, the expiration of the SEC's deferral period. 

SEC Chairman Mary Schapiro on July 20, 2010 during her testimony before the U.S. House of Representatives Committee on Financial Services, Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises on the Oversight of the SEC:  Evaluating Present Reforms and Future Challenges indicated that the SEC will make it clear that they will not expect issuers to comply with SOX Section 404(b) if they are otherwise exempted under the law.

Read more at the link.

Tags: Sarbanes-Oxley Articles & Information, Announcements, 404, 404 audit, Non-accelerated filer 404(b) information, Sarbanes-Oxley, Sarbanes-Oxley for Non-Profits