March 16, 2006
As CFO of United Financial Corp., I was most encouraged to learn that the SEC had established the Advisory Committee on Smaller Public Companies. Under the new recommendations, United would be a microcap company. In 2005, we had budgetted $100,000 in additional audit fees to complete our SOX 404 testing, prior to the one year extension of the compliance deadline to 2007. For our company, that cost represented a $.03 per share impact on our earnings per share.
United fully supports the Committee's recommendation that microcap companies be exempt from the external audit requirement of SOX 404, but continue to complete management's assessment of internal controls under SOX 404 as well as maintain required corporate governance standards. This appears to be a balanced compromise. Management can continue to evaluate the effectiveness of its internal controls and governance standards, without the added burden of additional external audit costs to have those evaluations attested to by outside auditors. In our documentation and early testing of our internal controls, United has learned where weaknesses exist, and implemented changes. The objective of strengthening our system was achieved without the added cost of a $.03 negative impact on our bottom line. Management believes this is a much better outcome for both the company and our shareholders.