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The SEC Adopts Final Rules on the Definition of Significant Deficiency and Approves Auditing Standard No. 5
August 9, 2007 Full PDF
On July 25, 2007, the SEC held an open meeting to discuss issues relating to the evaluation of internal control over financial reporting ("ICFR"). At the meeting, the SEC approved the adoption of rule amendments to Exchange Act Rule 12b-2 and Rule 1-02 of Regulation S-X to define the term "significant deficiency" in ICFR. On August 3, 2007, the SEC issued a final rule release, defining the term "significant deficiency" as "a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of a registrant's financial reporting." The final rules regarding the definition of "significant deficiency" will be effective on September 10, 2007.