March 21, 2006
I am very excited about your proposed changes in the application of SOX 404. We are a public company with $29 million in annual sales. For the past 10 years we have not had a single comment in the auditor manangement letter with regard to internal control issues. While we may not have every procedure documented, we have a very hands-on management team and board that reviews the financial statements very closely each month and compares things to budget. The tone at the top of our company is very strong and we strive to do things correctly and ethically. We currently have the ability to close a month out in 2 business days and send out draft financials to our management team for review. We are always the first audit of the year for our external auditors and they enjoy coming out to audit us because we maintain a very complete and organized set of records which makes their job easier (more time to audit, less time to worry about finding and fixing things). With the proposed change to the rules, we will be able to continue on our present course without having to spend a lot of time and money putting in an elaborate set of controls that would not change our financial statement results one bit (except for decreasing net income due to increased costs).
The key to good solid financial reporting is to have a strong tone at the top, hire good, competent, ethical people to work in the key financial postions and keep your financial records open for constant review by the entire management team.
Thank you for swinging the pendulum the other way, more to a middle and more reasonable ground for us and other companies like us. Great work