The SEC proposes guidance to help cure corporate executives of what commissioner Paul Atkins calls an "obsessive-compulsive mentality" in checking for controls lapses.
The Securities and Exchange Commission proposed on Wednesday to make rule changes to encourage financial managers to focus their internal controls assessments on "those controls that are needed to prevent or detect material misstatement in the financial statements."
By injecting the notion of materiality — as well as a "risk-based" approach — into compliance with Section 404 of the Sarbanes-Oxley Act, the commission hopes to cure corporate executives of what Commissioner Paul Atkins calls an "obsessive-compulsive mentality" in checking for controls lapses.
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