UK, Irish Companies Get SOX Compliance Assistance

The U.K. Financial Reporting Council is offering some assistance to U.K. and Irish companies registered with the U.S. Securities and Exchange Commission on how to comply with Sarbanes-Oxley requirements regarding internal controls.

The good news for those foreign-based companies is that the SEC has said it will accept the framework many of those companies are adopting or already have in place for testing and reporting on internal controls. The FRC is seeking comment on a draft guide that will help those companies apply that same framework to comply with the new U.S. requirements.

Companies listed on the London Stock Exchange must comply with internal control reporting requirements similar to those set out in Sarbanes-Oxley. Many companies follow a framework commonly called the Turnbull report to guide them to compliance.

The 14-page "Turnbull Report," published in September 1999 by the Institute of Chartered Accountants in England and Wales, includes guidance for implementing sound internal controls for U.K. companies listed on the London Stock Exchange.

“The SEC has stated that the Turnbull report provides a suitable framework for evaluating the effectiveness of internal controls over financial reporting,” said Richard Fleck, chairman of the FRC review group preparing the current draft guide, in a statement. “This is good news for companies that are already using the Turnbull report in the U.K. and Ireland and wish to use it to meet these U.S. requirements as well.”

Fleck

The FRC is seeking comment through Nov. 30 on the draft guide that describes how to use Turnbull to comply with U.S. requirements. The guide explains SEC requirements regarding internal control reporting, identifies aspects of Turnbull that will aid compliance, and suggests other resources.

The council expects to issue the final document by the end of the year. U.K. and other foreign companies registered with the SEC need to comply with the new SEC requirements for reporting years ending on or after July 15, 2005.

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