Foreign Issuers Should Not Ease Off In Response To The Extension of Section 404 Sarbanes Oxley Implementation Date

Foreign issuers are urged not to relax their efforts in achieving Section 404 compliance. We spoke to Shaun Critten, senior partner of London based advisory firm willismorris.

(PRWEB) March 5, 2005 -- The Securities & Exchange Commission (SEC) announced, on 2 March 2005, that they were to grant a further extension to the implementation date of Sections 302 and 404 of the Sarbanes Oxley Act for foreign issuers.

Donald T. Nicolaisen, the SECs Chief Accountant, said, "The Section 404 requirements are among the most important parts of the Sarbanes-Oxley Act, and I encourage public companies to devote the necessary resources to make sure those requirements are implemented effectively. I don't underestimate the effort this will require for smaller companies and foreign private issuers, but this extension will provide additional time for those issuers to take a good hard look at their internal controls, as the Act contemplates."

What is clear is that the extension should not been seen by non-US companies as extra 'breathing space. Shaun Critten, senior partner at London based advisory firm willismorris said it is very encouraging that the SEC is listening to foreign registrants, who feel that they do not have the time to adequately assess the design of internal controls and to put in place cost effective, long term remediation strategies. Some companies have been looking at band-aid solutions to get them across the implementation line, yet these solutions may not be sustainable in the long term".

Foreign issuers should grasp this extension with both hands, but not let up in their implementation efforts. Those companies who think they can relax their deadlines are missing a trick. We firmly believe that S404 projects should continue with the existing deadlines, but project leaders should spend the extra 12 months focussing on the quality of the implementation effort, the deliverables and strategy, and ensure that compliance methodologies and remedation actions are sustainable into 2007 and beyond" added Critten.

Sustainability of the S404 process is a critical component that some companies are only starting to consider, now that they are well commenced on the internal control documentation. There are important issues of sustainability and continuity that should be forefont of S404 project leaders minds" suggested Critten. Issues such as embedding internal controls into the culture of the organisation, adapting the control structures for business change and expansion, bringing forward assurance requirements in the application development life cycle, managing outsourced providers, forecasting changes in material processes and locations, and documentation/version control are all critical success factors for ensuring that companies enjoy the long term benefits of improved internal control. Failure to do so could result in the S404 implementation effort being expensively repeated each year to support sign-off."

For further information, please contact shaun.critten@willismorris.co.uk

About Willismorris
willismorris does not provide statutory audit or assurance services, which means we are able to provide independent and impartial compliance services. Our Sarbanes Oxley, IFRS and Basle solutions are based around equiping the implementation teams to deliver projects effectively and efficiently. We also provide internal audit and risk management solutions.

Most of our professional staff individually have over 20 years experience in Sarbanes Oxley, Internal Audit, Business Continuity Management, Risk Management, Internal Control and Compliance. So though as an organisation we may be new, we have a long and experienced history.

###