The Securities and Exchange Commission (SEC) has issued a release to grant smaller public companies further relief from compliance with Section 404 of the Sarbanes-Oxley Act of 2002.

The SEC is granting relief to smaller public companies by extending the date by which management must assess the effectiveness of the company's internal controls.

Specifically the SEC has moved the date of compliance from fiscal years ending on or after July 15, 2007 to fiscal years ending on or after December 15, 2007.

This extension in and of itself is not that significant. However, the SEC has also moved the date of compliance for the auditors' attestation report on internal control over financial reporting. The deadline is now the first fiscal year ending on or after December 15, 2008. Therefore, the date extensions result in all non-accelerated filers being required to complete only the management portion of the SOX 404 in their first year of compliance with the requirements.

The SEC believes this will provide cost savings and efficiency opportunities to smaller public companies as they work to comply with the Sarbanes-Oxley 404 requirements. Approximately 44% of the United States public companies are non-accelerated filers.

In addition, new public companies will not be required to file the SOX 404 reports until their 2nd annual filing.