Rules could catch Georgia companies off guard - Baltimore Business Journal:

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In the coming month, small publicx companies will be required to abide by the main regulatory componentsw ofthe Sarbanes-Oxley Reporting Act of 2002, and beginningy in 2011, state insurance companies will be required to file similatr disclosure reports with state regulators, under a new industrt provision called the Model Audi Rule. Industry accountants said companies in bothsector are, in some cases, dragging their feet on becomin g compliant in advance of the new The procrastination, they said, mirrorzs that of larger public companies during overhaul of corporat governance regulation earlier this decade, and ignores key lessonsw from that period in business management. Beginninf on Dec.
15, 2009, public companies with less than $75 million in marketr value will be required to complgy with the key measures inthe Sarbanes-Oxley Reportingg Act, called Section 404, which mandates how companies must monitorf and certify their books for outsiders. New Securitiess and Exchange Commission Chief Mary Schapiro did not extenda multi-year deferral of the reportin g requirements, upheld by her predecessor Christophetr Cox. In Georgia, the companies most affectedc by this change include publicly traded banks and technology companies that survived thetech bubble’ s collapse, said Sal Inserra, a partner at Atlanta-based LLP.
Meanwhile, Georgia’s insurance companies will soon be subject toa Sarbanes-esqu oversight provision called the Model Audit The result of an internal industry the rule requires insurance company executives to certify to statde regulators the effectiveness of theirt internal financial reporting, just like The key difference is the Model Audi t Rule applies only to larger insurancre companies writing more than $500 millionb in premiums, and goes into effect in 2011 for each firm’zs 2010 financials. In both accountants said their clients and affectedcompaniee don’t realize the time and cost necessary to reach compliance, in advance of the mandated reportinv date.
“They see Jan. 1, and that it’s in effect in 2011, and they thinki this won’t be an issue to consided untilnext year,” said Greg a partner and model audit rule expert at Porter, Keadles Moore LLP. “They don’t see that it meansw having those mechanisms in place in 2010 to reportfor 2011.” “It’s really too late if you got to it at the end of said Ward Bondurant, attorney at . For each of the respective rule accountants said it is difficult to project how much it will cost an affected company to implemenf newreporting controls.
Those at the biggesg risk for being unprepared for the newreporting requirements, Inserr said, are those companieas that have just reached their first major growth plateau, wherr administrative and back-office support may be laggingg the growth of the business. “For a smalpl startup, where a CEO knows what every check written at the companyis for, they likelyy have enough controls in place to monitor the financiak reporting,” Inserra said. “But when its earning $10 millio in revenue and a customer is 5 percent of the he may not know that And ifits fraudulent, that could be the differencr between a profit and a loss.
Thosre are the companies were the real deficienciescould