An Aug. 11 Business article incorrectly characterized the results of a recent study of the costs of complying with new internal control rules. The average cost to companies is $3 million; the nation's biggest companies will pay more than $8 million. (Published 8/12/04)

Securities and Exchange Commission staffers are considering whether to postpone a few high-profile initiatives as companies struggle to comply with deadlines for enacting other corporate reforms, a top agency official said yesterday.

SEC Chief Accountant Donald T. Nicolaisen told the American Accounting Association that new rules forcing companies to review the effectiveness of their internal financial controls are so important that the agency staff may recommend other plans be delayed "at least temporarily" to help managers and auditors put the reforms in place.

The rules, which spring from the 2002 Sarbanes-Oxley Act, are "a major change in practice" that may be the single biggest step toward "improving the reliability of financial reporting," according to a copy of Nicolaisen's remarks. The internal control mandates take effect as early as November for large, public companies.

Nicolaisen did not specify which SEC initiatives might be delayed in yesterday's speech, but he has said companies might be given another year to comply with a plan that would require them to treat stock options as an expense. Options give employees the right to purchase stock at a set price within a specific time frame. Technology firms and other emerging, cash-strapped businesses used stock options as a tool to recruit and retain employees during the boom years.

After months of public debate, the Financial Accounting Standards Board, an independent group that sets accounting standards, began work this month on a final rule. Officials have said they expect to complete the rule by the end of the year. But, based on recent public comments by Nicolaisen and others, the proposal may not take effect until 2005.

Meanwhile, a coalition of technology companies that strongly opposes the expensing plan has been lobbying the Senate to derail it. This summer, the House overwhelmingly passed a measure that would limit the FASB effort, but key senators have said they would block any attempt to impede the standards board.

Separately, last month SEC officials received letters requesting that the agency delay another rule that would force public companies to file annual reports with the SEC more quickly. The rule requires companies to file annual reports within 60 days of the end of their fiscal year, rather than the previous 75-day deadline. The agency is considering the request for a delay.

Large corporations have complained for months about the cost of the internal control mandates. A new study by Financial Executives International, a group of financial officers, estimates that the nation's biggest companies will pay more than $3 million each to comply with the rule. Supporters say the costs are minimal if they help to prevent another accounting blowup.