SOURCE: Accounting Management Solutions

January 29, 2008 09:02 ET

Delay on Implementing SOX Section 404b Means More Time to Improve Internal Controls

WALTHAM, MA--(Marketwire - January 29, 2008) - Although the U.S. Securities and Exchange Commission is likely to propose a further one-year delay in implementing Sarbanes-Oxley Section 404b for small businesses, management still needs to comply with Section 404a, which requires them to opine on their assessment of internal controls over financial reporting, according to Accounting Management Solutions, Inc. (AMS).

"If the SEC grants extra time, it should be viewed not as a reprieve, but as an opportunity to begin or continue action to ensure timely compliance, improve internal controls, and likely reduce compliance costs," said AMS Director Greg Starr.

Currently, smaller public companies -- those having a maximum market cap of $75 million -- need to begin complying with Section 404b for fiscal years ending after Dec. 15, 2008.

A one-year delay would allow the SEC to study the results of companies that are preparing their financial statements for the first time, and let the SEC evaluate company internal assessments made in line with its new management guidance for smaller public companies.

More Time to Improve Internal Controls

According to AMS, a further delay would give management more time to improve its internal controls over financial reporting before auditors develop their report, and the SEC more time to review recent results and make additional recommendations to further reduce the cost of compliance.

"In working with our clients' outside auditors, we've already seen some of the benefits of AS-5 and the SEC's guidance to management of smaller public companies," noted Starr.

The Public Company Accounting Oversight Board last year adopted Auditing Standard No. 5 (AS-5) to increase the likelihood that material weaknesses in internal controls will be discovered before they result in a material misstatement of a company's financial statements.

"Auditors have been open and engaged with the process," Starr said. "While management can tailor its documentation and evaluation to its business, it's important to involve outside auditors in the process and gain their concurrence."

About Accounting Management Solutions

Accounting Management Solutions, Inc. (www.amsolutions.net), based in Waltham, Mass., is the leading provider of outsourced accounting, financial management, and recruiting services to emerging companies and public, private, and nonprofit organizations throughout New England. Established in 1998, AMS is ranked as one of the fastest-growing private companies in the United States by Inc. magazine, and in Massachusetts by the Boston Business Journal.

Contact Information

  • Contact:
    Peter Lowy
    Business Communication Strategies
    Tel: 617-734-9980
    Email: lowy@bus-com.com