What a Difference a Financial Crisis Makes

President Obama's nominee to head the U.S. Securities and Exchange Commission ("SEC"), Mary Schapiro, recently responded to inquiries about her view on compliance with Section 404 of the Sarbanes-Oxley Act ("SOX 404").  This section of the Act has been widely criticized as overly burdensome and costly.  However, in light of the escalating number of financial reporting frauds related to the recent financial crisis, this view is changing.  Here are Ms. Schapiro's thoughts on SOX 404.

Regarding, SOX 404, accurate, robust, and easy-to-understand financial reporting -- and the internal controls that guarantee it -- are critically important to investors and to the efficient functioning of our markets. Right now, we have a system where some issuers are complying with 404 and others are still exempt from it. It’s time that we bring uniformity to the system so that investors know what to expect from companies, while being sensitive to the needs of small businesses. I look forward to working with the small business community in making sure they have the tools they need to comply with 404.

This is certainly an 180 degree about-face for the SEC, who under the leadership of Chairman Christopher Cox worked to delay full compliance for many years.  For those companies hoping for another delay, it will not be coming.  If your company needs assistance with SOX 404 compliance, email Wheelhouse Advisors at NavigateSuccessfully@WheelhouseAdvisors.com to learn more about cost-effective compliance solutions.