SEC Won't Let Companies Modify Financials
In light of the new Securities and Exchange Commission (SEC) requirement that corporate executives attest to the validity of their financial statements, there has been a wave of companies coming forward and asking to revise their financials before the August 14 SEC deadline.
On June 28, the SEC ordered that corporate officers must personally certify that their most recent reports filed with the Commission are both complete and accurate. The SEC also published a list of 945 companies whose chief executive and chief financial officers are now required to comply with the new order.
The companies are not going to be allowed to modify reports - they must choose either to certify the reports as is or have their company reports classified with others that are not in compliance. "This is black or white, there is no gray," said SEC spokesman John Nester.
Officers will be able to offer explanations as to why they refuse to certify the report and that information will be made public. "Our goal is to supply a very clear picture of who's been in compliance and who has not," said Mr. Nester.
Although companies will not be allowed to modify existing reports, it appears from the statement the corporate officers are asked to sign that they will be able to file additional, corrected reports. The officer is to attest, "based on a review of the covered reports of [company name], and, except as corrected or supplemented in a subsequent covered report...," that his company's report contains no untrue statements of material fact and no omissions that would make the report misleading.
Meanwhile, many smaller companies not included in the original list of 945 are coming forward and voluntarily offering to certify statements and then issuing press releases to make sure investors are aware of their compliance.
Clarification - July 22, 2002: An SEC spokesman told AccountingWEB today that there has been no change regarding modification of financials. Companies can still amend their filings, just as they did prior to the certification order. The covered reports in the certifications include 10Ks, 10Qs, 8Ks, all definitive proxy materials, AND any amendments of these forms.
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