Regulators Not in Favor of Small Business SOX Relief
Securities and Exchange Commission Chairman Christopher Cox isn't ruling out further delays in applying stricter accounting requirements on small public companies but said such relief isn't the option preferred by regulators.
About 6,000 smaller public companies have yet to come under two requirements adopted by Congress in 2002 as part of the Sarbanes-Oxley Act, calling for companies to make an annual assessment of their internal financial-reporting controls, with further review by the company's outside auditor. Regulators have delayed applying that portion of the law to smaller companies amid complaints that compliance has been very costly and time-consuming for larger companies. In response to such complaints, the SEC and Public Company Accounting Oversight Board are working to make the requirement less burdensome for all companies.
In testimony prepared for delivery Wednesday to the Senate Small Business and Entrepreneurship Committee, Cox didn't rule out an additional delay in applying the internal-controls requirement to smaller companies, but said that approach isn't "Plan A" for regulators.
Cox said the SEC plans to make changes in a matter of weeks, giving smaller companies plenty of preparation time. Under the current schedule, smaller companies would make their first assessment of internal controls starting this year, and have auditors weigh in starting in 2008.