Thursday, May 04, 2006
SEC Chief Accountant Defends 404
Here's an interesting article from CFO where the SEC is promoting more a "risk-based" approach to 404 and controls testing. For a year now, we've been hearing about this risk-based approach. I think it's finally starting to sink in, but we'll need the auditors carry this out ... and reduce their manual testing.
Admits SEC's cost estimates were "way off," but says companies are likely testing too many controls. He also says the concept of different rules for smaller companies is "difficult."
Ronald Fink, CFO.com
The Securities and Exchange Commission's acting chief accountant, Scott Taub, defended the SEC's implementation of Sarbanes-Oxley 404 today, suggesting soaring costs were due to overly detailed controls testing. Taub also threw more cold water on industry hopes that 404 might be modified for smaller companies.
"If you think 404 does nothing for fraud, you're doing it wrong," Taub told an audience Thursday morning at the Fifth Annual Financial Reporting Conference at the Zicklin School of business at Baruch College. In fact, he said, companies may indeed be missing implementing 404 incorrectly by failing to focus on those controls that pose "substantial risk."
posted by Brian Moran @ 3:18 PM