Speech by SEC Chairman:
Closing Remarks Before the Roundtable on the Implementation of Internal Control Reporting Provisions
William H. Donaldson
U.S. Securities and Exchange Commission
April 13, 2005
Before we adjourn, I'd like to thank everyone for their participation today. I truly appreciate your willingness to share your experiences with us, and the information you have provided at this roundtable and on our website has been extremely valuable. I also would like to once again thank Chairman McDonough and the PCAOB board for their participation.
Today we heard a very open and insightful dialogue about the implementation of the new internal control reporting provisions. Several themes have been identified. For example, the discussions revealed that many companies have experienced benefits and improvements to their internal controls as a result of implementing these requirements. The internal control requirements also have led to an improved focus on internal controls by all stakeholders involved. An improved focus on controls has the potential to pay dividends in the future in terms of investor confidence, transparency and the quality of financial statements.
However, we also heard that there are some areas related to implementation of the new requirements that may need further attention or clarification. Implementing this major new requirement has not been without costs, and not without a learning curve. I am instructing the staff to evaluate the feedback we've received on these topics and to consider whether and how we can improve the guidance available to management and auditors in order to improve the effectiveness of the process. Given the importance of this issue - and the preparatory work that is already underway for assessments of internal control for 2005 - I will instruct my staff to complete their evaluation as quickly as possible.
Finally, we heard of some of the special challenges that smaller companies may face. We are sensitive to these concerns. Section 404 is a priority issue for our Advisory Committee on Smaller Public Companies, and I look forward to their work and potential recommendations in this area.
Again, thank you all for attending.