SEC Extends Section 404 Filing Deadlines For Small Companies

December 15, 2006

FEI Summary

On Dec. 15, 2006, the U.S. Securities and Exchange Commission (SEC) released a Final Rule extending the deadline for small public companies to file their first management and auditor reports on internal control under Sarbanes-Oxley Section 404. Under the Final Rule, the first management report must be provided for fiscal years ending on or after (FYEOA) Dec. 15, 2007, with the first auditor’s report on internal control due one year later (FYEOA Dec. 15, 2008). Small companies are defined by SEC as "nonaccelerated filers," generally those with less than $75 million market cap.

The SEC stated in the Final Rule it will consider again whether further extensions are necessary, based on when final rulemaking results from the proposed management guidance voted on by SEC December 13 (to be released for a 60 day public comment period, followed by a final rule), and the anticipated proposed revision of Auditing Standard No. 2 (AS2), to be voted on by the Public Company Accounting Oversight Board (PCAOB) at its December 19 meeting, and then released for public comment, followed by a final rule (standard).  

Additional details are in this FEI Summary.

Prepared Dec. 18, 2006 by Edith Orenstein eorenstein@FinancialExecutives.org, Director, Technical Policy Analysis, Financial Executives International (FEI). This summary does not reflect FEI opinion unless specifically noted above.