PCAOB News

February 19, 2007
The PCAOB has submitted a new Auditing Standard for public comment to replace Auditing Standard No. 2. The new standard mandates Top-down Risk-based approaches for SOX compliance but also allows the auditor to utilize testing performed by the company. This new standard, if approved in its present form, will likely reduce compliance costs for companies that implement Top-down Risk-based approaches for SOX compliance. See the PCAOB Draft Document Release for more information.

December 19, 2006
The PCAOB voted unanimously to replace Auditing Standard No. 2. "The proposed new standard on internal control will be a principles-based standard designed to focus the auditor on the most important matters, increasing the likelihood that material weaknesses will be found before they cause material misstatement of the financial statements." See the PCAOB Press Release for more information.

October 17, 2006
The PCAOB has released a Q&A to help auditors deal with the FAS123r auditing standards. See the news release on the PCAOB website. The Q&A specifically identifies inputs such as Expected Life and Volatility for more rigorous auditor scrutiny.

May 16, 2005
PCAOB Issues Staff Q&A entitled Auditing Internal Controls Over Financial Reporting. Specfically, the staff encouraged the use of a top-down risk-based approach for 404 Compliance.

SEC News

December 21, 2007
The SEC has released a new Staff Accounting Bulletin (SAB110) for FAS 123r expected life computation for companies with limited stock option history. This SAB extends the previous interpretation allowing simplified expected life computation. Please see the SEC bulletin for more details.

November 17, 2007
The SEC has released a guide for SOX 404 Compliance for smaller companies. This guide describes the SEC's interpretation of the Sarbanes-Oxley law and implementation advice. This advice closely mirrors our SOX 404 Tool approach. Please see the SEC Website for this helpful guidance.

December 15, 2006
The SEC announced new deadlines for non-accelerated filers. Annual reports for the fiscal year ending after December 15, 2007, will be required to include management's assessment over internal controls. Annual reports for fiscal years ending after December 15, 2008 will be required to include both management's assessment and auditor attestation over internal controls. This is a slight delay over the previous deadlines. However, for December 31 and June 30 year-end companies, this does not delay your compliance date. See the full 2006-210 press release for more information.

December 14, 2006
The SEC announced new guidance for Sarbanes-Oxley implementation by public companies. They proposed new standards emphasizing the use of top-down, risk-based assessment of internal controls over financial reporting. In an effort to clarify the Sarbanes-Oxley act, this press release refines the SEC's expectionations for company compliance. Despite press to the contrary, the SEC did not defer or relax SOX 404 requirements for public companies. This press release is a reinforcement of the May 17 press release (see below):

...the Commission remains committed to all of the steps set forth in the roadmap that was released entitled "Next Steps for Sarbanes-Oxley Implementation" (SEC Press Release 2006-75, May 17, 2006).

See the full 2006-206 press release for more information.

May 17, 2006
The SEC announced the next steps for Sarbanes-Oxley implementation and clarified their intent that companies use a top-down, risk-based assessment of internal controls over financial reporting. After a brief further postponement (all filers are expected to comply for fiscal years beginning on or after December 16, 2006), the SEC confirmed that "ultimately all public companies will be required to comply with the internal control reporting requirements of Section 404." The SEC also reinforced their guidance on the required use of a top-down risk-based approach. See the full 2006-75 press release for more information.

November 14, 2005
The FAS123r whitepaper is now available. Companies will now be required to expense options grants (including unvested options for existing grants) in their 2006 financials with the starting date of Jan. 1, 2006. Read this document to gain insight into the new FAS for stock-based compensation.

SOX News

June, 2006
The COSO commission has released a comprehensive document titled 'Internal Control over Financial Reporting - Guidance for Smaller Public Companies." This document covers important details for implementing the COSO framework in a cost effective manner. Importantly, they discourage the use checklists and generic lists of controls or other non company-specific products or content. See the Executive Summary for more information.