Financial Reporting Financial Reporting
  March 2003   

 Issues Covered
SEC Meets Sarbanes-Oxley Act Rulemaking Deadline

Audit Committee Financial Experts

Auditor Independence

Code of Ethics Disclosures

Conditions for Use of Non-GAAP Financial Measures

Disclosures About Off-Balance Sheet Arrangements and Contractual Obligations

Standards of Conduct for Attorneys

Insider Trades During Pension Fund Blackout Periods

Audit Records Retention Requirements

For Further Information

The SEC's Releases

Summary of Effective Dates

 
Print Newsletter
Print Newsletter

SEC Meets Sarbanes-Oxley Act Rulemaking Deadline

The Sarbanes-Oxley Act of 2002 (the Act) requires the SEC to adopt rules to implement a number of its provisions. The Act required the SEC to adopt many of those rules by January 26, 2003. In a flurry of rulemaking, the Commission met its deadline. As former SEC Chairman Pitt stated, the last two weeks before the deadline were “the busiest two weeks of rulemaking in this Agency's history.”

New rules the SEC adopted in January will affect registrants in many ways. They will change:

  • The composition and functions of audit committees;
  • The relationships between audit committees, auditors, and registrants;
  • Companies’ disclosures in earnings releases and SEC filings;
  • Companies’ relationships with their attorneys;
  • Insiders’ ability to buy or sell company securities during pension fund blackout periods; and
  • Records retention requirements for auditors.

Several of these changes are quite significant. In that regard, a number of provisions have been added to the auditor independence rules that companies and auditors will need to address carefully because the consequences of even minor inadvertent violations are so significant (i.e., loss of the auditor’s independence).

The comment periods for the proposals were short, as was the Commission’s time to consider and react to the many comments it received. Therefore, implementation issues will no doubt arise. This letter provides an overview of the new rules and highlights some of what we have learned thus far regarding implementation. The rules have various effective dates and transition periods. At the end of this letter we have provided a timeline, which should help keep these dates in perspective. We have also provided links to the releases through which the Commission communicated the new rules and provided its views.



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Copyright © 2003, BDO USA,LLP. Material discussed in this Financial Reporting newsletter is meant to provide general information and should not be acted upon without first obtaining professional advice appropriately tailored to your individual facts and circumstances.