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Thursday, 25th April 2024 |
| Sarb-Ox compliance postponed by a year |
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| Irish companies registered with the US Securities and Exchange Commission (SEC) have been granted an extra year by the SEC to comply with the S.404 requirements of the Sarbanes Oxley Act, a decision that has been welcomed by the Institute of Chartered Accountants in Ireland (ICAI). |
S.404 requires a company to include in its annual reports a report by management on the company’s internal control over financial reporting and an accompanying auditor’s report.
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The ICAI welcomed the decision, with president Terence O’Rourke saying,’In the immediate term, this will be welcome news for the Irish companies involved. Meeting the S.404 requirements has been a considerable task, a task complicated by the simultaneous move to international accounting and auditing standards as well as the new compliance statement contained in the 2003 Companies Act. The decision by the SEC to defer the internal control reporting requirements will certainly be welcome in that context.
Hopefully, too this recognition by the SEC of the difficulties involved in filing may herald a change of approach on their part in the long run. While this decision only relates to the implementation date, it is nonetheless helpful in so far as it allows companies adequate time to prepare for effective implementation. However it is to be hoped that the SEC might go one step further and reconsider the content of the Section 404 requirements. Nonetheless, it is particularly welcome to see a regulator prepared to consider the practical implications of their decisions and indeed to make changes if required.
This is a lesson we could well learn at home too. While there is a consensus that says that SMEs in particular should not be subject to burdernsome regulation, it continues to happen. For example, the Companies Act compliance statement requirements, being compared abroad to the Sarbanes Oxley legislation, impacts on comparatively smaller companies, thereby exposing them to further additional costs. We need to work harder to get this difficult balance right.’ |
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| Article appeared in the March 2005 issue.
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