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The SEC announced that its professional staff has commenced a cost-benefit study of an upcoming auditor attestation requirement for smaller companies under Section 404(b) of the Sarbanes-Oxley Act of 2002, and proposes a one-year extension of final compliance requirements for smaller companies while the study is underway.
The study will collect and analyze extensive "real world" cost and benefit data from a broad array of companies currently complying with Section 404 under newly-issued guidance for companies and auditors.
To reduce Section 404 costs while preserving its benefits, the SEC last year issued new guidance for management's Section 404 assessment. At the same time, the Commission and the Public Company Accounting Oversight Board voted unanimously to replace the standard for the 404(b) auditor attestation, which is intended to make the process more efficient. Larger companies are now filing their first 404(b) reports under the new audit standard.