New interpretive guidance for improved compliance with the
Sarbanes-Oxley Act was yesterday approved by the
Securities and Exchange Commission.
guidance aims at helping focus company management on the internal controls
that best protect against the risk of a material financial mis-statement.
SEC chairman Christopher Cox said
the US Congress had never intended that the s404 process should become
‘inflexible, burdensome and wasteful’.
‘The objective of Section 404 is to provide meaningful disclosure to
investors about the effectiveness of a company’s internal controls systems,
without creating unnecessary compliance burdens or wasting shareholder
resources,’ said Cox.
Chief Accountant of the SEC, Conrad Hewitt, said the guidance will enable
companies of all sizes to focus on risk and materiality – which truly mattered
to the integrity of the financial statements.
‘We have also worked closely with the PCAOB to better align our
interpretative guidance and the PCAOB’s proposed auditing standard, which the
PCAOB will consider for adoption tomorrow,’ said Hewitt.
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