The latest study from Sarbanes-Oxley consultancy Lord & Benoit revealed that years of section 404 compliance delays for small business haven't really served their purpose. But it's not because they haven't been long enough or they weren't applied to the right businesses, Market Watch reports. Rather, it's because the small businesses that had the benefit of the delays didn't use them wisely.
The survey, which looked at Audit Analytics data for 3,321 public non-accelerated filers with fiscal years ending between December 2007 and January 2008, specifically asked the question, "Did the continuous delays in deadlines help smaller public companies to prepare for Sarbanes-Oxley Section 404(a) compliance?" The simple answer is no.
Here are some of the facts, according to Market Watch:
- 34 percent completed assessments at the last minute or not at all.
- 12 percent either filed a bad report or disclosed inadequate segregation of duties.
- 7 percent did not bother to file a report.
Lord & Benoit president and report author Bob Benoit says the results could very well represent only "the tip of the iceberg." He notes that small companies may not take Sarbox compliance seriously until auditors have a direct means of telling investors about their companies' material weaknesses.