Is going public now more difficult with the Sarbanes-Oxley Act?
Yes, there are strict rules for the functioning of audit committees, accounting firm requirements and, of course, internal controls over financial reporting. The internal control aspect has caused extensive work for companies, requiring internal and external resources to document and test their internal controls as required by SOX. A company is required to have this documentation and testing in place so the auditor can then test that information and include those reports in the public filings made after completing the IPO. Private companies anticipating going public should be wary of pitfalls, including greater lead time, the extent of documentation needed, and judgment about the quality of the documents from an internal and external standpoint. If companies just barely comply with SOX’s Section 404, they will miss potential benefits, such as tightening controls over the business, streamlining operations by eliminating redundancies, and providing a higher level of assurance to investor
