SEC Guidance Regarding Managements Report on ICFR外文资料.pdfVIP

CAHILL GORDON REINDEL LLP July 5, 2007 EIGHTY PINE STREET NEW YORK, NEW YORK 10005-1702 TELEPHONE : (212) 701-3000 FACSIMILE : (212) 269-5420 This memorandum is for general information purposes only and is not intended to advertise our services, solicit clients or represent our legal advice as to any particular set of facts, nor does this memorandum represent any undertaking to keep recipients advised as to all relevant legal developments. SEC Guidance Regarding Management’s Report on Internal Control over Financial Reporting I. Introduction On May 23, 2007, largely in response to criticism that the implementation of Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”) was complex, burdensome, and expensive, the Securities and Exchange Commission (“SEC”) unanimously approved interpretive guidance to help public companies apply a top-down, risk based evaluation of their internal control over financial reporting (“ICFR”). The SEC anticipates that the interpretive guidance will allow companies of all sizes to implement the rules efficiently and effectively. The interpretive guidance was released on June 20, 2007 along with amendments to Rules 13a- 15(c) and 15d-15(c) under the Securities and Exchange Act of 1934.1 The interpretive guidance is intended to provide companies with greater clarity and transparency about their obligations relative to Section 404; thereby promoting the preparation of reliable financial statements and preventing and detecting material misstatements. By encouraging management to bring its own experience and informed judgment to the evaluation process, the SEC anticipates that the pressure on management to look to auditing standards for guidance will be lessened. A. Section 404 Section 404 of SOX requires that each an