For the Journal Register Co., a $400 million, publicly held newspaper chain with operations in the northeastern U.S., the opportunity that presented itself this past spring to buy 21st Century Newspapers, a private chain with publications in and around Michigan, was exciting–and at the same time, worrisome. True, 21st Century might fit nicely into Journal Register's expansion plans, but the challenge of bringing the acquired firm into compliance with the Sarbanes-Oxley Act's reporting requirements by the Journal Register's Dec. 31 yearend close was daunting, to say the least.


Fortunately, the staff at the Securities and Exchange Commission (SEC)–which has been swamped with complaints and questions from companies looking to acquire and seeking clarification about just this issue–rode to the rescue in late June. The SEC posted on its Web site a staff opinion stating that acquiring firms can have a grace period of up to a year to get the acquired firms' books in compliance, whether or not the acquired firm is private. The Public Company Accounting Oversight Board sent out a companion notice. "We would typically expect management's report on internal control over financial reporting to include controls at all consolidated entities," the SEC staff wrote. "However, we acknowledge that it might not always be possible to conduct an assessment of an acquired business's internal controls over financial reporting in the period between the consummation date and the date of management's assessment."

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