It’s been a busy week on the internal controls front.

The latest news comes from the SEC. Commissioners have approved new guidance for complying with Section 404 of the Sarbanes-Oxley Act, which requires an assessment by management of a company’s internal controls over financial reporting. According to this CFO.com article, the SEC “also proposed a definition for ‘material weakness’ (defined as having a reasonable possibility of leading to a material misstatement that will not be prevented or detected on a timely basis) and eliminated the requirement for auditors to attest to management’s process of evaluating internal controls.”

What the SEC didn’t do is extend the deadline for small businesses — those with less than $75 million in market capitalization — to comply with Section 404. “The SEC staff assured commissioners that the new guidance provides scalable and flexible ways for smaller companies to meet the end-of-’07 deadline,” CFO.com reports.

The SEC decisions follow earlier reports that the PCAOB is considering a new standard for internal control audits (to replace Auditing Standard No. 2, “An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements”), and that costs associated Section 404 compliance fell 23 percent in 2006.

Do you think small businesses should have more time to comply with Section 404?