SEC extends SOX deadlines for smaller firms

Most public companies will not have to comply with financial reporting requirements set by Sarbanes-Oxley for at least one more year, because of a deadline extension granted Friday by the Securities and Exchange Commission.

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Most public companies will not have to comply with financial reporting requirements set by Sarbanes-Oxley (SOX) for at least one more year, because of a deadline extension granted Friday by the Securities and Exchange Commission (SEC).

The deadline extension means smaller public companies must provide a management assessment of internal controls over financial reporting in annual reports for fiscal years ending 15 December 2007 or later.

The previous deadline was 15 July 2007, a date by which smaller companies were also expected to have an auditor attest to the management assessment of the effectiveness of internal controls. This auditor attestation requirement was extended until reports are filed for fiscal years ending 15 December 2008 or later.

The SOX law, which is intended to prevent corporate scandals like the Enron debacle, began applying to large public companies near the end of 2004. Smaller public companies, defined as those with less than $75 million (£38m) of stock in the hands of public investors, have been granted several deadline extensions because the SEC has not yet interpreted how the rules should apply to them.

SEC reports say there are 7,402 smaller public companies that make up 78.5% of the total number of public companies nationwide.