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SEC: Time May Run Out on Internal Controls Compliance, Sarbanes-Oxley

SEC: Time May Run Out on Internal Controls Compliance, Sarbanes-Oxley

by Rick Turoczy on October 11, 2004

Public companies are required by the Sarbanes-Oxley Act of 2002 to assure investors that internal controls are adequate. Assertions must be backed up by outside auditors.

In coming months, “a number of companies will announce that they have material weaknesses in their controls,” SEC Chief Accountant Donald Nicolaisen cautioned in a speech in Chicago on Thursday.

Do not expect the SEC to delay the upcoming Nov. 15 deadline for larger firms. “We do not have any intent to introduce another delay into the system,” Nicolaisen said in an interview Friday with Dow Jones Newswires. Smaller firms must comply after July 15, 2005.

Results of the reviews will appear in company annual reports, due out in the first quarter of next year. Nicolaisen told Dow Jones Newswires that he expects firms that don’t complete the reviews in time to take preemptive strikes by issuing press releases or filing an 8K report with the SEC to explain the delay. Some believe the number of companies falling into this category could range from less than 5 percent to more than 20 percent.

SEC: Time May Run Out on Internal Controls Compliance, Sarbanes-Oxley

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