On November 4, 2009, the House Financial Services Committee approved the Investor Protection Act (H.R. 3817). Included within the Act was the exemption from SOX auditor attestation requirements for small businesses. Specifically, the Act was amended by the committee to exempt permanently companies with a market capitalization of less than $75 million from the Sarbanes-Oxley Act requirement that auditors attest to management's declaration that their internal controls over financial reporting are effective. However, the legislation still has to move through the House and Senate. We immediately provided a hopeful update to our clients, before many Registered Public Accounting Firm were even aware of the Committee approval.
Although it appears the requirement for auditors to attest to management's declaration that their internal controls over financial reporting are effective is well on its way to the grave. The Act does not change the requirement that all public companies must document, test and report on the adequacy of the company's internal control over financial reporting. Sorry! Until further notice, SOX 404 is still required for smaller reporting companies with fiscal years ending after June 15, 2010.
Since 2004, members of dbbmckennon have been assessing, documenting and testing internal controls. Our members have worked with some of the largest companies in Southern California. Please contact either Michael McKennon or Russ Boyer if you have any questions.