Speaking at a New York State Society of CPAs conference earlier this week, Conrad Hewitt declined to speak in absolutes when it came to across-the-board implementation of the Sarbanes-Oxley Act’s infamous Section 404.The Securities and Exchange Commission chief accountant avoided absolutes when speaking on the question of compliance for micro-cap companies -- the first time that I’ve heard a federal regulator hedge their bets on implementation that’s currently planned for 2008. It would be far from the first deferral for companies will market capitalizations under $75 million -- but the first ray of hope for those small companies since the SEC declined to strongly move forward on a number of recommendations outlined last year by an advisory committee.
The SEC and the Public Company Accounting Oversight Board both issued statements last year forming the broad outlines for a new SOX Auditing Standard No. 5 -- which would use materiality considerations as the key factor in helping companies reduce the cost of complying with the law. But Hewitt told the conference that if the new standard doesn’t succeed in driving costs down, something else will have to be done. And small companies might not have to have to complete an internal controls audit by external auditors until 2009.
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