SOX404 AUDITOR ATTESTATIONS:

ONE-YEAR REPRIEVE FOR NON-ACCELERATED FILERS

Last week, the SEC granted non-accelerated filers an additional year before they will be required to provide auditor attestations regarding their internal controls.

A “non-accelerated filer” is a reporting company that is neither an “accelerated filer” nor a “large accelerated filer” as defined in Rule 12b-2 of the Securities Exchange Act of 1934, which generally means that it has less than $75 million in worldwide public float held by non-affiliates. Please note that this change does not affect requirements regarding management’s assessment of internal controls.

Background

Under Section 404 of the Sarbanes-Oxley Act of 2002 and related regulations (SOX404), public companies other than registered investment companies must include in their annual reports:

• management’s report on internal control over financial reporting; and
• an attestation regarding internal controls from the company’s outside auditor.

Current Deadlines

Currently, non-accelerated filers are required to provide management’s assessment of internal controls in annual reports for fiscal years ending on or after December 15, 2007, and an auditor attestation for fiscal years ending on or after December 15, 2008.

New Deadlines

Under the new rules, which will be effective 60 days after publication in the Federal Register:

• A non-accelerated filer will still be required to provide management’s report in annual reports for fiscal years ending on or after
  December 15, 2007, as under the current deadlines. Management reports included during the period before an auditor attestation is required will be deemed “furnished” rather than filed.
• A non-accelerated filer must provide an auditor attestation of internal controls in annual reports for fiscal years ending on or after
  December 15, 2009.

Accelerated filing status is determined at the end of the fiscal year based on a market-value test as of the last day of the most recently completed second fiscal quarter. Even if your company is a non-accelerated filer today, if it meets the definition of “accelerated filer” for 2008, it would become ineligible for the extension on the auditor attestation requirement.

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public and private companies and underwriters and offers the support of over 3,700 lawyers worldwide.

Our Public Company and Corporate Governance group, with more than 200 attorneys globally, counsels public and private companies on corporate governance and regulatory matters, including compliance with SOX and other regulatory requirements; governance best practices; disclosure matters; internal investigations and governance audits; and civil, administrative and criminal actions and investigations.

For further information about this Alert, please contact:

Mark Hoffman

Barbara Nepf

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