From the September 2006 issue of Treasury & Risk magazine

Cutting Some Slack

A recent study by PricewaterhouseCoopers showed European stock exchanges for the first time in recent history outpacing their U.S. brethren when it came to initial public offerings (IPOs), in both volume and value. Whether or not the desertion can be attributed to the rigors of complying with Section 404 of the Sarbanes-Oxley Act, as critics charge, the Securities and Exchange Commission is clearly starting to take the threat seriously.

Last month the SEC proposed giving all newly public companies and foreign private issuers listing on a U.S. exchange a one-year reprieve on compliance with 404. In effect, IPOs and foreign private issuers would not have to comply with requirements for a management assessment of financial reporting internal controls or an auditor attestation confirming the assessment until the company files its second annual report with the SEC. "Giving new public companies an extra year after going public to comply with the internal control assertion and audit requirements will give them some breathing room," says R. Trent Gazzaway, managing partner of corporate governance at Grant Thornton LLP.

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