Foreign Firms With Close Call on Sarbanes-Oxley
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Foreign companies with US listings, definitely needed the extension on deadlines for complying with Sarbanes-Oxley compliance requirements, according to an Ernst & Young survey. 40% of foreign private issuers, (PFIs) that responded, had anticipated compliance with section 404 of the Sarbanes-Oxley Act 2002. The timeline would have been only one or two months before the SEC announced that the deadline had been extended. Many of the PFIs involved are based in the UK. One or two months beforehand, would have been fine if nothing needed fixing or contingencies having to be dealt with. Paul Kennard, lead partner for Sarbanes-Oxley at Ernst & Young, said, “If foreign listed companies had been relying on an extension from the SEC and an extension was not forthcoming, many of them would have had no room to manoeuvre so now is not the time to ease off; companies must still keep a foot on the gas and can learn from their US counterparts.” UK and other European companies need to look at the experience of firms that have already been through the mill. A particular area of concern, in the States is IT. E&Y recommend starting to look at IT from the start. E&Y even go so far, to say that PFIs will find this even more onerous, given high use of disparate IT systems, widescale outsourcing and reliance on IT controls. The experience of the US is that after a similar deadline, the number of companies expecting a close finish actually increased.
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