October 17, 2003
11-Ks and 404 On Wednesday
On Wednesday – on a teleconference program on my old website – David Lynn, Chief Counsel of Corp Fin, clarified that Section 404 of is not applicable to Forms 11-K. Section 404, and the SEC’s rules implementing it, requires each issuer that files
periodic reports with the SEC under the Securities Exchange Act of 1934 to (i) establish and maintain a system of internal control over financial reporting, (ii) include in its annual report a report by management on the system of internal controls, and (iii) accompany the report with an attestation report on the system of internal controls.
As noted by Gibson Dunn in a recent client alert, “this guidance addresses a significant question that was left open in the release adopting the Section 404 internal control requirements. Although most employee benefit plans would not have been viewed as “accelerated filers,” and thus would not have been required to comply with the Section 404 rules until filing the Form 11-K report for the fiscal year ending on or after April 15, 2005 (whereas public companies that qualify as “accelerated filers” must comply with the 404 rules for fiscal years ending after June 15, 2004), there was substantial uncertainty as to how the 404 rules would
apply in the context of employee benefit plans. Accordingly, the SEC staff’s interpretation provides reasonable and welcome relief.”