Do we need a Disclosure Committee? 2180
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Hi:
I work in a small-cap manufacturing company. Currently we do not have a Disclosure Committee, but our SOX consultants have strongly suggested that we create one since they have become part of industry best practice.
I was wondering what you all think about the need for such a Disclosure Committee. It seems to me that a company of our size (roughly 400 employees with a tight-knit core of executives) does not need a formal committee. Am I right, or am I just being too reluctant to embrace the new post-Enron world?
Thanks,
Albie
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I’m not aware of any reason that an ‘audit committee’ could not serve the same function as a ‘disclosure committee’…especially if there was already an independent financial expert on the audit committee.
As far as a ‘disclosure committee’ being ‘best practice’, it’s news to me.
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Being a small organization, you probably have staff effectively functioning as a disclosure committee, whether or not you give them that title. You just need to ensure that you have structure around how you pull your financial information together and report to the SEC.
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Thanks for the comments, guys.
I’ve done some further research and discovered that the SEC actually did recommend that companies form a Disclosure Committee (in line with Section 302 of the Act). It seems to me that such committees are aimed at larger companies with a more diverse management team. The bottom line is that each filer must decide what is best for their own situation. I still fail to see a need for one in our company, but we will keep evaluating it going forward.
I would welcome any comments that any of you folks may have had with Disclosure Committees. This is all news to me…