Regulators give little ground on Sarbanes-Oxley deadline

The US Securities and Exchange Commission (SEC) yesterday extended its internal control reporting deadline for some companies liable to comply with the Sarbanes-Oxley Act, giving them a little more time to get IT their systems in order.

Companies with a public float of at least $75m (£40m), known as 'accelerated filers', will now have an additional 45 days following the passing of the deadline of Section 404 of the Act, where directors and auditors have to certify the veracity of financial data used in the production of SEC filings.

The Section focuses on these 'internal control reports', where the production of financial data is heavily dependant on IT-based processes within various systems for accounting and sales, for example.

Alan Beller, SEC corporation finance director said: 'This exemption will encourage companies to file important information for investors, including audited financial statements, on a timely basis, while providing an appropriate accommodation for internal control reports.'

And the move comes after some 300 companies warned the SEC they were likely to miss the deadline for Section 404 due to weaknesses in their internal controls.

And recent research published by Anglo-US management consultancy, Parson suggested complying with Sarbanes-Oxley may cost 45 to 50 UK FTSE 100 companies (plus some other smaller companies with equity or debt traded in the US) £450m to comply in the first year alone.

Section 404 mandates a company's auditor to identify 'any material internal control weakness' or 'significant deficiency', in verifying that management has sufficient operational command to produce reliable and compliant financial reports.

Rick Mitchell, partner at law firm, McDermott, Will & Emery told Computing that the internal control reporting makes the IT department 'subject to the same extra workload of box ticking and paper-pushing' now faced by a company's account department, auditors and directors.

'The extra time will only help a little,' he added.