FOR IMMEDIATE RELEASE
ICBA Asks for Extension of Deadlines for SOX 404 Small Company Implementation
Washington, D.C. (February 26, 2007)—The Independent Community Bankers of America (ICBA) asked the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) to extend their deadlines to implement Sarbanes-Oxley (SOX) Section 404 internal control attestation and audit requirements for non-accelerated or small company filers to give community banks more time to digest the proposed revised guidance and the agencies time to evaluate their effectiveness.
"Community banks need additional time to understand and apply the proposed new guidance and auditing standard that the SEC and the PCAOB intend to finalize by the end of the year," said Christopher Cole, ICBA regulatory counsel. "The extension also gives the agencies an opportunity to evaluate the cost effectiveness of the guidance and standards on accelerated filers and revise the proposed new standard if there is no overall reduction in SOX 404 audit costs."
The SEC has proposed new guidance for management under SOX 404 and the PCAOB has proposed a new auditing standard for internal controls that would supersede Auditing Standard No. 2. ICBA recommended that the agencies propose a quantitative benchmark or goal for the new standard tied to a reduction in overall SOX 404 audit costs. A 20 percent reduction in Section 404 audit costs would show the industry that the agencies are committed to reducing the overall costs of SOX 404.
ICBA also recommended specific changes to the proposed new guidance including clarifying the definition of "material weakness." However, while a more risk-based and scalable auditing standard may reduce some of the high costs of SOX 404, ICBA said that smaller public companies should be partially or fully exempted from Section 404 in order for them to grow and to stay competitive with larger companies and international enterprises.
Read ICBA's letter at www.icba.org.