Small Public Companies Face Internal Controls Deadline

Submitted by Melissa Lajara on Fri, 10/02/2009 - 15:01

The smallest publicly reporting companies will have to begin complying in nine months with the final portion of a key provision of a law that requires companies to report to the public about the effectiveness of their internal control over financial reporting, the Securities and Exchange Commission (SEC) said in a press release.

Under the provisions of Section 404 of the Sarbanes-Oxley Act, public companies and their independent auditors are each required to report to the public on the effectiveness of a company’s internal controls. The smallest public companies with a public float below $75 million have been given extra time to design, implement and document these internal controls before their auditors are required to attest to the effectiveness of these controls, the SEC said.

This extension of time will expire beginning with the annual reports of companies with fiscal years ending on or after June 15, 2010.

While the reporting and auditor-attestation grew out of the 2002 law passed by Congress, all U.S. public companies have been required to maintain internal accounting controls since 1977.

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