Consequences for FCPA Compliance

Over the past year, most issuers have been preoccupied with the basics of Sarbanes-Oxley compliance, with the result that some of the subtler compliance implications have not yet been fully appreciated. However, as discussed last month, it is evident that the provisions of the Act will have implications for compliance in all substantive areas in which a company maintains a compliance program, but especially those having payment and financial dimensions, such as the FCPA Section 302, already mentioned in the disclosure discussion last month. Section 302 requires the periodic certifications to state that appropriate disclosures to the Board and auditors have been made with respect to significant deficiencies and material weaknesses in internal controls. Section 404 provides for each annual report of an issuer to contain an internal control report, and for attestation by the external auditors of management's internal control assessment. Section 406 requires a code of corporate ethics for senior financial officers, which is defined to include compliance with law obligations. Section 906 contains new criminal penalties for false certifications.