Guidelines for Establishing and Evaluating Disclosure Controls and Procedures

Public companies are now required to establish and evaluate disclosure controls and procedures under new rules that the Securities and Exchange Commission (SEC) adopted on August 29, 2002. Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, (Exchange Act), require public companies to maintain and evaluate the effectiveness of the design and operation of their disclosure controls and procedures.

The importance of disclosure controls and procedures is underscored by the requirements in Rules 13a-14 and 15d-14 under the Exchange Act that principal executive and principal financial officers of public companies, or persons performing similar functions (Principal Officers) sign certifications that must be included in quarterly and annual reports required under the Exchange Act. These certifications include statements regarding the Principal Officers’ responsibilities for establishing, maintaining, and evaluating the disclosure controls and procedures and the disclosure in the applicable report of the Principal Officers’ conclusions as to the effectiveness of the disclosure controls and procedures as of a date within 90 days prior to the filing date of the report.

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