TheCorporateCounsel.net

July 12, 2006

SEC Issues Concept Release on Internal Controls

Yesterday, the SEC issued this concept release, as earlier promised under the SEC’s Four-Point Plan. The SEC seeks input on 35 questions related to assessing risks, identifying controls, evaluating effectiveness of internal controls and documenting the basis for the assessment. Comments are due in 60 days – doesn’t it feel like folks have commented on internal controls at least a dozen times?

The SEC still intends to announce an additional postponement of the deadline for compliance by non-accelerated filers, including foreign private issuers that are non-accelerated filers. The current deadline for non-accelerated filers is their first fiscal year ending on or after July 15, 2007.

COSO Issues Internal Controls Guidance for Smaller Companies

Yesterday, COSO announced the release of its guidance for small public companies (including an archive of a webcast held yesterday about the guidance). Here is a perfunctory statement from the SEC.

Although the guidance should prove helpful, I wouldn’t be surprised to hear complaints from small issuers that it doesn’t go far enough to reduce their burdens. For instance, I have heard some small issuers say that some of the controls are undocumented and that it would be expensive if they had to start anew to document those controls. One suggestion was that maybe the auditor could rely on extra levels of management review to compensate for fewer documented controls. On yesterday’s COSO webcast, one of the panelists said that – although the documentation could in some instances be less extensive for smaller companies – there still needs to be some level of documentation so that the auditors would be able to review and test the controls. Thanks to Bob Dow of Arnall Golden Gregory for the heads up and his thoughts!

The Evolution of Law Review Articles?

I’m not a big fan of law review articles generally – and not because I was the ultimate slacker on my own law review squad – as I often find they don’t provide much in the way of practical guidance. So I was surprised to see this paper (warning: don’t click if you are offended by profanity) which I am told will be published soon as a law review article. Ah, the changing nature of scholarship…