FOR IMMEDIATE RELEASE
ICBA Says SEC’s SOX 404 Guidance Unlikely to Reduce Audit Costs for Small Businesses
Recommends Extending Deadline for Audit Reports by One Year
Washington, D.C. (April 18, 2007)—The Independent Community Bankers of America (ICBA) told Congress that proposed internal control guidance under Section 404 of the Sarbanes-Oxley Act is unlikely to reduce audit costs, particularly for smaller public companies. ICBA called for a one-year extension for small filers to give the Securities and Exchange Commission's (SEC) and the Public Company Accounting Oversight Board (PCAOB) time to evaluate the impact and the cost effectiveness of the new guidance on large SEC filers, and to give small SEC filers more time to understand and apply the new guidance.
"ICBA believes that smaller public companies should be partially or fully exempted from Section 404 in order to be competitive with larger companies and foreign competition," ICBA said in a written statement to the Senate Small Business and Entrepreneurship Committee. "In addition, ICBA recommends at least another one-year delay in the Section 404 due dates for non-accelerated filers so they will have until the due date for their 2008 annual report to file their management internal control reports and the due date for their 2009 annual report to file the auditor's attestation report."
ICBA also believes that the SEC should propose a quantitative benchmark or goal for the new standard that is tied to a reduction in overall SOX 404 audit costs.
ICBA's statement comes as the Small Business and Entrepreneurship Committee holds an April 18 hearing to consider concerns about the SEC proposed new guidance for management under SOX Section 404 and a proposed new internal control auditing standard under the same law by the PCAOB.
"A closer alignment is needed between the broad and principles-based SEC guidance and the more prescriptive proposed new auditing standard," said ICBA. ICBA also recommended that the SEC guidance include more illustrations of how the guidance should be implemented, particularly for smaller public companies.
Read ICBA's written statement at www.icba.org.