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Accounting deadline looms for small firms

Long Island Business News, Nov 9, 2007 by Laura Theis

Three years after Sarbanes-Oxley created a slew of new work for accounting firms, accountants are gearing up for another helping of Sarbox assignments.

This time, it's small public firms facing a Dec. 15 deadline to be compliant with the managerial aspects of Sarbox, which is designed to reduce accounting fraud. And as that deadline approaches, accountants are getting busy.

"The demand for our services has tripled in the fourth quarter," said Brian Aryai, partner-in-charge of Grassi Consulting in Lake Success.

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This will not be the mad rush accountants saw when the act first became law. Some accountants cautioned that this time, firms aren't scrambling to get acquainted with Sarbox's requirements. And new standards passed in June make Sarbanes-Oxley an easier challenge. David Rubenstein, partner at Weiser LLP in Lake Success, said the new rules offer guidelines for managerial compliance - which companies must file with their year-end financial reports - so accountants can advise their clients on evaluating their own internal controls.

This is particularly important for this deadline, because it only applies to the managerial side of compliance for companies with under $75 million in market capital.

Therefore, the extra work hours clocked by accounting firms this year come from consulting with these companies, not auditing them. Small businesses won't need to comply fully with Sarbanes-Oxley until Dec. 15 of next year.

Back in 2004, two years after the law passed Congress, larger companies needed to comply with both the auditing and management aspects of Sarbanes-Oxley. Today, unlike three years ago, most accounting firms have experts on staff to handle Sarbox cases.

"It's really a shifting of work from larger companies," Rubenstein said.

On the other hand, some small businesses are ill prepared for what they're about to face. Extensions may have led to a false sense of security that small-cap firms wouldn't have to comply.

"If you're struggling for resources and trying to grow business, compliance is not something that you want to spend money on," said Bob Sturm, managing partner of the Venture Capital and Technology practice at PricewaterhouseCoopers in Melville.

The deadline for small companies was extended several times because the Securities and Exchange Commission recognized that proportionately, small companies need to allocate more of their income toward compliance.

For accountants, working with small companies on this issue can be less complex, but also more time consuming because they're not as sophisticated, analysts added.

Accounting deadline looms for small firms

Long Island Business News, Nov 9, 2007 by Laura Theis

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