SEC Implements Internal Control Provisions of
Sarbanes-Oxley Act; Adopts Investment Company R&D Safe Harbor
Washington, D.C., May 27, 2003 — The Securities and Exchange Commission today
voted to adopt rules concerning management's report on internal control over
financial reporting and certification of disclosures in Exchange Act periodic
reports. The Commission also voted to adopt new Rule 3a-8 under the Investment
Company Act to provide a nonexclusive safe harbor from the definition of
investment company for certain research and development companies.
Management's report on internal control over financial reporting and
certification of disclosure in Exchange Act periodic reports
The Commission voted to adopt rule and form amendments to implement requirements
of Section 404 of the Sarbanes-Oxley Act of 2002.
Management's Report on Internal Control over Financial Reporting
Section 404 of the Act directs the Commission to adopt rules requiring each
annual report of a company, other than a registered investment company, to
contain (1) a statement of management's responsibility for establishing and
maintaining an adequate internal control structure and procedures for financial
reporting; and (2) management's assessment, as of the end of the company's most
recent fiscal year, of the effectiveness of the company's internal control
structure and procedures for financial reporting. Section 404 also requires the
company's auditor to attest to, and report on management's assessment of the
effectiveness of the company's internal controls and procedures for financial
reporting in accordance with standards established by the Public Company
Accounting Oversight Board. The Commission received over 60 comments on the
Section 404 proposals that expressed general overall support for the
Commission's approach to implementing Section 404 of the Act. The adopting
release will incorporate a number of changes recommended by commenter.
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What is the purpose of the Sarbanes
Oxley Act?
Sarbanes Oxley
Public Companies Going Private
inspect and monitor companies in an attempt to
protect shareholders and investors of the
companies. Some highlights under the Sarbanes
Oxley Act defines which records are to be stored
and for how long. These regulations affect the
IT departments of corporations specifically. The
IT departments are responsible for storing a
company's business records. Highlights of the
Sarbanes Oxley Act include issues dealing with
the destruction, alteration, or falsification of
these records.
read more about Sarbanes
Oxley>