The SEC extended the certification deadline for Sarbanes-Oxley Act (SOA) Section 404 compliance until mid-year 2004, effectively giving most companies an additional year to comply with mandates for establishing solid processes and internal controls in financial reporting. This is great news for companies that have been frustrated by the lack of explicit government requirements and confused by what SOA really means to their business and supporting IT infrastructure. With this extra time, multifaceted user teams can now thoroughly evaluate all potential remedies both near term and longer term to prioritize and schedule any projects necessary for SOA compliance.
AMR Research concludes that companies are already evaluating multiple options, many of which are, by definition, long-term projects. For details on SOA compliance projects, see the recent AMR Research Report "Prioritizing IT Investments for Sarbanes-Oxley Compliance." Section 404 certification will now be effective for any year-end filings for fiscal years ending June 15, 2004 or after. For firms with a calendar fiscal year, FY04 year-end reporting will be subject to Section 404 stipulations. For small-cap firms (less than $75M in market capitalization) and foreign private issuers, the deadline has been extended even further to fiscal year-ends on or after April 15, 2005. Will this change take the wind out of SOA's sails? The compliance boat may have just hit a lull, but a gust will come up again soon. Corporate governance mandates are inevitable, and smart companies will not delay efforts to get core processes and controls in place now. Rather than rushing the process, companies can do it right the first time. Why? Because it just makes good business sense. For more information on this subject, please go to http://www.amrresearch.com/Content/view.asp?pmillid=16108.
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