The Securities and Exchange Commission has begun a cost-benefit study of the upcoming attestation requirement for smaller companies under Section 404(b) of the Sarbanes-Oxley Act.

The study will collect and analyze the data provided by companies that currently comply with Section 404 under newly issued guidance for companies and auditors. The new management guidance and the new auditing standard were intended to reduce the compliance costs of Section 404 while strengthening the focus on material controls. The final report will inform any decision to improve the efficiency and effectiveness of Section 404 implementation, according to the SEC.

The SEC's study will consist of two main parts: a Web-based survey of companies that are subject to Section 404; and in-depth interviews including companies that are just now becoming compliant.

The dual approach will enable the SEC to gather data from a large cross-section of companies and analyze more detailed information about what drives costs and where companies and investors derive the benefits.

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