As your company goes forward, negative reactions from regulators and investor groups will increase if companies fail to provide them with comprehensive and easily accessible data, both financial and operational. Public Company Management Services can help your company gain a clear understanding of accelerated filing deadlines and new disclosure and accelerated filing deadline requirements. We can also help your company implement the plans and systems necessary to meet those requirements.

Specific compliance issues regarding the Sarbanes-Oxley Act that we address follow.

Auditor Reports to Audit Committees
The accounting firm must report to the audit committee all "critical accounting policies and practices to be used…all alternative treatments of financial information within [GAAP] that have been discussed with management…ramifications of the use of such alternative disclosures and treatments, and the treatment preferred" by the firm.

Corporate Responsibility For Financial Reports
The CEO and CFO of each issuer shall prepare a statement to accompany the audit report to certify the "appropriateness of the financial statements and disclosures contained in the periodic report, and that those financial statements and disclosures fairly present, in all material respects, the operations and financial condition of the issuer." A violation of this section must be knowing and intentional to give rise to liability.

Disclosures In Periodic Reports; Disclosures Required

• Each financial report that is required to be prepared in accordance with GAAP shall "reflect all material correcting adjustments . . . that have been identified by a registered accounting firm . . . ."
  
  
• "Each annual and quarterly financial report . . . shall disclose all material off-balance sheet transactions" and "other relationships" with "unconsolidated entities" that may have a material current or future effect on the financial condition of the issuer.
  
  
• The SEC shall issue rules providing that pro forma financial information must be presented so as not to "contain an untrue statement" or omit to state a material fact necessary in order to make the pro forma financial information not misleading.
  
  

Study and Report on Special Purpose Entities
SEC shall study off-balance sheet disclosures to determine a) extent of off-balance sheet transactions (including assets, liabilities, leases, losses and the use of special purpose entities); and b) whether generally accepted accounting rules result in financial statements of issuers reflecting the economics of such off-balance sheet transactions to investors in a transparent fashion and make a report containing recommendations to the Congress.

Disclosures Of Transactions Involving Management And Principal Stockholders
Directors, officers, and 10% owner must report designated transactions by the end of the second business day following the day on which the transaction was executed.

Disclosure of Audit Committee Financial Expert
The SEC shall issue rules to require issuers to disclose whether at least 1 member of its audit committee is a "financial expert."

Real Time Disclosure
Issuers must disclose information on material changes in the financial condition or operations of the issuer on a rapid and current basis.

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