In 1982 I received a letter that, incredibly, bore a seven-year-old postmark. It was sent by my parents in New York and was intended to reach me at college in Colorado. The mailing had apparently taken a wrong turn somewhere near the Rockies, but somehow - through six subsequent changes of address spanning three presidential administrations - it miraculously tracked me down to my then-residence in Tempe, Ariz.Inside was the modest monthly stipend my parents sent me while in school, but the check had been drawn on a bank that had long since been swallowed by a giant competitor. So the letter had basically been reduced to a conversation piece.
Take a moment and think how much has happened to each of you over a seven-year span, either on a personal or a career level. In that sense, seven years can seem like a very long time.
By the same token, would seven years seem more than a reasonable amount of time to come into compliance with a federal mandate? Take, for example, Section 404 of Sarbanes-Oxley. Since the bill's passage into law in 2002, the measure has come in for more criticism and complaints than what used to pass for lasagna in airline meals.
SOX 404 in particular was held up as the poster child for overregulation by corporate America, particularly smaller companies whose costs for compliance in manpower and capital were proportionately higher than those of, say, a Microsoft or a GE. As a result, their compliance mandates were delayed for longer than JetBlue in an ice storm.
Just prior to Christmas, the Public Company Accounting Oversight Board voted unanimously to circulate a proposal that would scale back the amount of testing required for auditors to evaluate internal controls over the financial reporting process by encouraging auditors to focus on just their riskiest controls - ones that would have the greatest material effect on financial reporting or misstatements.
As expected, letters began pouring in in support of the new rules. Among the correspondence was a letter from Sens. John Kerry, D-Mass., and Olympia Snowe, R-Maine, requesting yet another one-year delay in requiring smaller public companies to comply with the provisions of 404. Kerry and Snowe wrote that extending the compliance mandate until 2008, coupled with a deferment for auditors' attestations until the 2009 annual reports, would ease the transition for small businesses and at the same time allow "field testing" of the new guidance. Since both Kerry and Snowe sit on the Senate Committee on Small Business and Entrepreneurship, their position on SOX no doubt is heavily influenced by constituent concerns.
That said, if small filers are granted yet another one-year extension, it would be a full seven years since the bill was signed into law that attestations would be required to appear in their annual reports. Let's hope that should another SOX extension be granted, unlike the contents of my letter, the spirit of SOX will remain valid after seven years.
