US SEC moves to improve implementation of Sarbanes-Oxley Act welcomed by BIO

The US Securities and Exchange Commission has announced a series of actions it intends to take to improve the implementation of the Section 404 internal control requirements of the Sarbanes-Oxley Act of 2002.

These include issuing SEC guidance for companies, as well as working with the Public Company Accounting Oversight Board (PCAOB) on revisions of its internal control auditing standard. They are based on extensive analysis and commentary in recent months from investors, companies, auditors and others, says the SEC. The expected actions will also include SEC inspections of PCAOB efforts to improve Section 404 oversight and a brief further postponement of the requirements for the smallest company filers, although ultimately all public groups will be required to comply with the internal control reporting requirements of Section 404, says the SEC.

Responding to the announcement, Jim Greenwood, chief executive of the USA's Biotechnology Industry Organization, said: "BIO is encouraged by the SEC's statement of intent to review the cost burdens for smaller public companies associated with Section 404 compliance and to consider reforms. BIO considers the decision a positive step toward implementing Sarbanes-Oxley as Congress intended." He noted that, in its release, the SEC said its forthcoming reform concept document will address several issues that may be the subject of Commission guidance to address the needs of public companies. It also states that the SEC will seek input on the appropriate role of outside auditors in order for the Commission to provide alternatives to the current approaches.