The chairman of the U.S. Securities and Exchange Commission has spoken out against any possible exemptions from Section 404 of the Sarbanes-Oxley Act for small businesses.
The head of the Securities and Exchange Commission (SEC), Christopher Cox, has stated that small businesses will not be exempt from the requirements for outside audits stipulated in the Sarbanes-Oxley Act (SOX).
Last December an SEC advisory committee recommended that changes be made to SOX and only the largest 20% of public companies be subject to outside audits certifying their systems for protecting assets, and financial accounting etc. The committee’s proposal came as a result of concerns over the cost of complying with SOX.
However, Christopher Cox ruled out a full exemption for small companies. He said that the aim of the SEC was to make Section 404 of SOX more cost-effective as well as making sure that it worked properly, rather than simply waiving it completely.
The U.S. Chamber of Commerce is among those lobbying for changes to SOX, claiming that smaller businesses simply cannot afford to comply with its provisions. The SEC itself appreciates the difficulties faced by small businesses and has already extended the final deadline for SOX compliance for such firms.
The advisory committee’s official recommendations for small businesses are due to be presented to the SEC members for discussion later this month.
“The main thing is that the SEC knows how much internal control measures cost for businesses of all sizes. I’m certain that if Section 404 of SOX isn’t cancelled for small businesses, then it will at least be relaxed. Otherwise, the regulatory burden could, with time, become unbearable for small companies," believes Denis Zenkin, marketing director at InfoWatch.
Source: Seattlepi.com
