SOX 404 Auditor Attestation Not Required for Smaller US Reporting Companies
On Wednesday, July 21, 2010, President Obama signed into law the Dodd-Frank Act, which, among other measures, exempts smaller reporting companies from the Sarbanes-Oxley (SOX) requirement under Section 404(b) for an auditor report on management's assessment of internal controls over financial reporting. Companies that are exempt are "non-accelerated filers". A company is a non-accelerated filer until its non-affiliated market capitalization is $75 million or more, measured at the end of the previous year's second quarter. An accelerated filer can exit accelerated filing status when its market capitalization is less than $50 million at that measurement date.
The exemption does not affect the requirement that management report on internal controls over financial reporting required under Section 404(a) of SOX. However it comes as very welcome relief for smaller issuers, who faced the prospect of much greater auditor related costs as a result of SOX 404(b). The law comes just in time for smaller issuers, as the auditor report was to be due for non-accelerated filers for fiscal years ended on or after June 15, 2010.
If you have any questions about how the new law affects your company, contact any member of Clark Wilson's Corporate Finance / Securities Law Group.
Securities Law Bulletin is produced by the Corporate Finance / Securities Law Group at Clark Wilson LLP. The information and links in this bulletin should not be treated by readers as legal advice and ought not be relied upon without further, detailed legal counsel being sought.
| Posted by Clark Wilson LLP on Jul 22, 2010 | ||
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