TheCorporateCounsel.net

January 14, 2004

Disclosure of Internal Control Deficiencies

Even though the SEC already has delayed the effective date once, my money is that the SEC will again delay the effective date of the Section 404 internal control reports. Right now, “accelerated filers” are required to file their first report for fiscal years ending after June 15, 2004 (all others can wait until their fiscal years end after April 15, 2005).

Since the PCAOB still has not acted on its proposal to set attestation standards, “something’s has gotta give” as Jack Nicholson would say. [personal note – due to a receding hairline, back in college days I would pretend that my name was “Pat Nicholson” and Jack was my uncle – no girls bit that I can recall.]

Not surprisingly, the number of companies that are disclosing that they have deficiencies in their internal controls has slowly grown. In fact, there have been rumblings that the SEC would be disappointed if there failed to be a significant number of these disclosures. We have updated our list of sample disclosures in this area at Internal Controls – Deficiencies and Weaknesses Identified in the “Disclosure Analysis and Samples” Practice Area.