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Compliance: SEC Bends to Pressure and Delays Again
After many cries from small companies, the SEC has decided to delay for one more year the requirement of smaller companies under section 404(b) of Sarbanes-Oxley to have have auditor attestation. Smaller companies now will not need to comply until their first fiscal year which ends on or after December 15th, 2009.
SEC Chairman Christopher Cox said that “the Commission believes that strong investor protection and healthy capital formation go hand-in-hand. The study will give us the opportunity to ensure that the investor protections of Section 404 are implemented in the way that Congress intended, and do not impose unnecessary or disproportionate burdens on smaller companies.”
The SEC professional staff will conduct a cost-benefit analysis to see what the actual costs of this requirement means to small companies. Data will be collected by conducting a Web-based survey of companies that are subject to Section 404. There will also be additional in-depth interviews of companies that are now in the process of achieving compliance.
The study will survey ‘real world’ costs seen at many of today’s companies, and the resulting report will seek to determine how else section 404 can be made more efficient and effective.
The SEC continues to walk a tight rope balancing compliance costs with investor protections. Even after five years since Sarbanes-Oxley has been on the books, it looks like it will be considerably longer before its requirements reach equilibrium.
