Regulators address internal control costs.

The SEC and the Public Company Accounting Oversight Board (PCAOB) responded to concerns expressed during an April SEC roundtable discussion on implementing the Sarbanes-Oxley Act's internal control provisions. Domestic and foreign public company representatives, auditors, investors and others said the act's requirements had improved financial reporting controls. Much of the discussion centered on the present and future costs and benefits of complying with section 404 of the act. In response, the SEC published Staff Statement on Management's Report on Internal Control Over Financial Reporting (www.sec.gov/ info/accountants/stafficreporting.htm), which emphasizes management's responsibility for tailoring the type and extent of controls to a reporting entity's needs, thereby maximizing the cost-efficiency and effectiveness of controls. To complement the SEC guidance, the PCAOB, on May 16, 2005, issued a board policy statement and additional questions and answers (Qs&As) for auditors on Auditing Standard no. 2, An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements, supplementing those it published in 2004 and earlier this year (www.pcaobus.org/standards/staff_questions_ and_answers/index.asp).