Regulators Focus On Internal Control Over Financial Reporting

In light of a number of recent developments, public companies should make sure their internal control over financial reporting (ICFR) complies with section 13(b)(2)(B) of the Securities Exchange Act of 1934. Both the SEC and the PCAOB have placed increased focus on ICFR since early 2013, and, in May 2013, the updated framework for the evaluation of internal control was issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.

Both SEC Chief Accountant Paul Beswick and SEC Deputy Chief Accountant Brian T. Croteau have urged public companies to continually assess the adequacy of their internal control. Croteau noted in a December 2013 speech that companies may not be properly identifying material weaknesses or evaluating the severity of a deficiency in internal control. Croteau's remarks came in a speech at the American Institute of CPAs' Conference on Current SEC and PCAOB Developments. In what may suggest an increase in enforcement