By James Hamilton, J.D., LL.M.
A provision in the House financial services appropriations bill (HR 2829) would, according to its sponsor Rep. Scott Garrett (R-NJ), extend the small business exemption from the internal control mandates of Section 404(a) of Sarbanes-Oxley through the end of FY 2008. Section 905 states that none of the funds made available under HR 2829 may be used by the SEC to enforce the requirements of section 404 of the Sarbanes-Oxley Act with respect to non-accelerated filers under section 210.2-02T of title 17, Code of Federal Regulations. The provision came by way of the Garrett amendment, which passed the House 267-154. The Financial Services Appropriations Act for Fiscal Year 2008 passed the House on June 28, 2007, and has been referred to the Senate Appropriations Committee.
Section 404(a) of the Act requires that annual reports filed with the SEC must be accompanied by a statement by company management that management is responsible for creating and maintaining adequate internal controls over financial reporting. Management must also present its assessment of the company’s internal controls.