Uncle Sam is giving some public U.S. companies a break.
Due to the amount of requests, the Securities and Exchange Commission has delayed the deadline for large corporations (with a market cap of greater than $75 million) to file annual and quarterly financial reports.
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The delay will give companies and auditors an extra year to comply with new federal rules on internal controls over financial reporting.
This year, the submission period was to shrink to 60 days from 75 days, effective for 2004 annual reports; and to 35 days from 40 days for 2004 quarterly reports, the SEC said. But these new, accelerated deadlines will be delayed by one year.
With Section 404 of the Sarbanes-Oxley Act, Congress ordered companies to harden their internal controls over financial reporting and for auditors to sign off on them. The SEC later asked companies to speed up their corporate reports. Many firms said they could not beef up their controls as well as meet the new filing deadlines.
Cal Braunstein, CEO and executive director of research for consulting firm Robert Frances Group, said that auditors have been pressuring the SEC for more time because a lot is at stake.
"Auditors are under so much pressure to get this done right," he said. When there are two sets of auditors with two separate -- and subjective -- opinions of what a company needs to do to comply, the result is a lot of conflict that takes time to sort out and resolve, he said.
"These guys [auditors] don't want less time to get the job done right the first time around. "They're working hard to avoid penalites, bad press and jail time, and they want as many days as they can get to nail it all down," Braunstein said.
CIOs say the deadline delay might help the government better understand the far-reaching impact of SOX, particularly on SMBs.
"It does make a difference to every publicly held company if they are a small to mid-size business," said Sandy Hofmann, CIO of Alpharetta, Ga.-based Mapics Inc., "because it means that maybe, just maybe, the SEC will have more time to study and examine the full ramifications [of SOX]."
Larry Baye, a principal at Grant Thornton LLP in New York, said the announcement doesn't come as a great surprise. Some companies expected it, he said.
"I think people got a stay of execution," he said, "but it's real clear where they [the feds] are heading with what happens a year from now."