Sarbanes-Oxley Section 404(b), defined as the requirement to have internal controls reviewed and opined by an external auditor, became a requirement for non-accelerated filers or those companies with a market cap of less than $75MM (after removing insiders, etc) on June 15, 2010.
Sarbanes-Oxley Section 404(a) or, the requirement for corporate executives to document, test, and then attest to the effectiveness of their internal controls in their 10Q, 10K, and 302/906 certifications is not under consideration for exemption and has been a requirement for all companies since December 15, 2007.
As of today, June 25, 2010, the requirement for non-accelerated filers to comply with Sarbanes-Oxley Section 404(b) is in effect. The Wall Street Reform Act includes an amendment that has been approved by both the House and Senate that will grant non-accelerated filers a permanent reprieve from being subjected to Section 404(b). Non-accelerated filers have been granted a reprieve from complying with Section 404(b) since 2004.
The final, approved version of the Wall Street Reform Act was delivered to the president today. Although there is no mention of Sarbanes-Oxley in the article below, Vibato has spoken with press staff that participated in the House & Senate meetings and we have confirmed that the amendment is included in the bill before the president. More information below about where it goes from here. It has not been signed into law – yet.
What does this all mean for non-accelerated filers? Truly, nothing. Since non-accelerated filers have not been subjected to Section 404(b), this vote should not change much about their business other than relieve any expected increase in external audit fees. For those CFO's considering stopping Sarbox work all together just remember, 404(a) still applies and we are hearing from several of our external auditor friends that they will place a deeper level of scrutiny on any clean 404(a) or 302/906 certification claims. Remember, 404(a) still applies and has since 2007. Falsely stating that you have a clean 404(a) internal control environment is fraud.
View a video of the President speaking about the bill here: