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To 404(b), or Not to 404(b)?

Small companies will soon learn whether they will have to comply with Sarbox's requirement to get an auditor's sign-off on internal controls.

Sarah Johnson, | US
July 12, 2010

404 Compliance Does Not Have to be so Expensive

Small companies may be more likely to be lacking the internal controls necessary to prevent fraud and to ensure the accuracy of financial statements. New companies experiencing rapid growth tend to concentrate on meeting the demands of that growth, with internal controls and accounting being an afterthought. This exposes them to greater risk of fraud and financial mistatements. Not requiring them to comply with 404(b) would be a mistake and would make investing in these companies a greater risk. One way these small companies could reduce their costs would be to abandon the almost exclusive use of "Big 4" audit firms. Larger regional firms can provide the same level of assurance at significantly lower costs.

Posted by Michael Alao | July 14, 2010 09:55 am

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