New legislation is gaining steam that would change the definition of which companies are subjected to an external audit review of their internal controls (e.g., Sarbanes-Oxley Section 404(b)). The bill, called 'H.R.3606 - Reopening American Capital Markets to Emerging Growth Companies Act of 2011,' passed the House by an overwhelming bipartisan vote of 54-1. The bill still has to go through the Senate and then get Presidential approval before it becomes law (you can follow the progress here: http://www.opencongress.org/bill/112-h3606/show).
Tags: Internal Controls, Sarbanes-Oxley Articles & Information, 404, SOX, AICPA, 404 audit, audit costs, Non-accelerated filer 404(b) information, Sarbanes-Oxley Training, Sarbanes-Oxley, external auditing, Internal Control Education
Google SAS 104-115 and you will find mostly articles by us (Vibato) discussing the need for auditors to pay special attention to internal controls as part of their audit. Why? Because the AICPA & the PCAOB dictates standards that the auditors must adhere to in order to perform their audits. Parts of these requirements include reviewing your internal controls and this applies to ANY COMPANY THAT IS AUDITED – public, private, non-profit; it doesn’t matter. If you are audited, your auditors must look at your internal controls as part of your audit. If you do not have any documented internal controls then be prepared for a higher audit bill because your auditors will have to go looking for internal controls at your company on your dime year-over-year. Moreover, due to independence issues, they are not allowed to share their work with you to use going forward so they will do this work each year and all you will see for it is a higher bill. Period.
SSAE 16 - a new accounting standard for evaluating service organizations' operational and financial controls - will replace SAS 70 effective June 15, 2011.