1.3.1 - Corporate Governance Tracking Requirements
under Sarbanes-Oxley and SEC Rules


October 2003

Audit Committee Effective Date
Auditor independence rules Independent auditors prohibited from performing many non-audit services; all services performed by independent auditors must be pre-approved by audit committee; audit partner rotation required; prohibition on hiring former employees of independent auditor into financial oversight role. Generally effective now; some have phase-in periods
Audit committee standards NYSE/Nasdaq must implement rules requiring de-listing of issuers that do not have audit committees that are independent and establish whistle-blowing procedures. Req’d by ann. s/h meeting after 12/15/03
Audit committee financial expert Companies must disclose name of audit committee financial expert, and if none, why; to be an expert, committee member must have relevant experience auditing, preparing, analyzing or evaluating GAAP financial statements generally comparable to the issuers, plus other experience. Req’d in next 10-K
Senior Officers
Code of ethics for senior financial officers Code applies to CEO, CFO and controller; company must disclose waivers and amendments; code must be publicly disclosed. Req’d in next 10-K
Loan prohibition (402) New loans and modifications to existing loans to executive officers are prohibited; consensus view is that cashless stock option exercises are not prohibited if structured properly. 7/29/02
CEO/CFO certification of SEC reports (302 & 906) Each 10-Q and 10-K must include two CEO and two CFO certifications as to accuracy of financial statement and adequacy of “disclosure controls”; companies must implement disclosure controls that ensure timely and accurate reporting of material information in SEC reports. 8/29/02
Internal controls certification and attestation (404) CEO and CFO must each certify annually that they have evaluated internal controls and whether or not such controls are effective; independent auditors must attest to the annual CEO/CFO certifications; officers must also certify as to significant changes in internal controls on a quarterly basis. Effective for accelerated filers for fiscal years ending after 6/15/04
Reporting
Transaction reporting by insiders Filing deadline is two days after trade date; report must be filed electronically via EDGAR 2 day report - 8/29/02;Elec filing - 6/29/03
Non-GAAP disclosure rules(Regulation G) All disclosures of non-GAAP measures trigger need for comparable GAAP measure and reconciliation; earnings releases must be furnished to SEC on Form 8-K, regardless of whether they include non-GAAP disclosure; earnings calls may trigger need for filing of transcript unless company takes advantage of exception for oral disclosures. 3/28/03
Enhanced and accelerated disclosure Deadlines for 10-Ks and 10-Qs will be shortened to 60 and 35 days over next three years; annual reports must include disclosure of off-balance sheet arrangements and a table of contractual liabilities; companies need to post their SEC filings on their websites. Acceleration over next 3 years; others apply to next 10-K
Other
Attorney conduct rules Attorneys who practice before the SEC must report certain violations of federal securities laws. 8/26/03

Page 1   2   3   4

Back to Table of Contents

Provided By DLA Piper