SEC's New Rules Requiring Certifications and Disclosure Controls and Procedures

On August 27, 2002, the SEC adopted new rules that will require public companies to change the way in which they record, process, summarize, and report public information about their operations and financial condition. The new rules will require management to refocus a considerable amount of their time and energy (and, arguably, a considerable amount of the company’s resources) toward compliance with these new rules. These new rules are part of an evolving sea change in the SEC’s approach to disclosure – a move away from traditional periodic reporting of historical line-item information toward a regime of “real time” analytical communication with the investing public.

Perhaps most importantly, the new rules will require public companies to integrate their controls and procedures for recording, processing, summarizing, and reporting information into their ongoing operations, necessitating dramatic changes in corporate conduct to ensure the timeliness, accuracy, and reliability of public disclosures.

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