{"id":158,"date":"2006-12-14T13:38:13","date_gmt":"2006-12-14T21:38:13","guid":{"rendered":"http:\/\/www.formtek.com\/blog\/?p=158"},"modified":"2006-12-14T13:38:13","modified_gmt":"2006-12-14T21:38:13","slug":"compliance-sec-relaxes-sarbanes-oxley-for-smaller-companies","status":"publish","type":"post","link":"https:\/\/formtek.com\/blog\/compliance-sec-relaxes-sarbanes-oxley-for-smaller-companies\/","title":{"rendered":"Compliance: SEC Relaxes Sarbanes-Oxley for Smaller Companies"},"content":{"rendered":"

Much of the core of Sarbanes-Oxley regulations and the philosophy that drove it into being is about good business.\u00a0\u00a0Sarbanes-Oxley is a call to\u00a0businesses to\u00a0strengthen their attention\u00a0on internal control.\u00a0 But that’s not to say that Sarbanes-Oxley is without its problems.<\/p>\n

The crux of the\u00a0problem voiced by many small and mid-size companies about\u00a0the Sarbanes-Oxley regulation has been its vagueness of language coupled with the requirement\u00a0for\u00a0companies to bring\u00a0in an external auditor.\u00a0 Bringing in an outside auditor adds significant costs. \u00a0And many auditors took\u00a0on their assignments using the\u00a0most risk-adverse interpretation of Sarbanes-Oxley, resulting in requests for extremely granular and detailed reporting.\u00a0 The results were very high costs, sometimes resulting in accounting costs that\u00a0were double or more than what companies were paying for accounting services prior to Sarbanes-Oxley.<\/p>\n

On Wednesday, the SEC\u00a0proposed changes relax the Sarbane-Oxley regulation first enacted in 2002 due to complaints from many companies\u00a0citing\u00a0the law as being too burdensome and costly.\u00a0 The proposals are now up for public comment, and in the hours since the announcement, most initial comments seem to be quite favorable.<\/p>\n

A major proposed change in the law is that an external auditor would no longer be needed.\u00a0 The SEC noted that because the accounting needs of smaller companies were often considerably less complex than larger ones that they would allow the regulation to “scale and tailor” to the business.<\/p>\n

If enacted, the new rules would reduce the requirement for testing internal controls and providing documentation for companies with a market value between $75 million and $700 million.<\/p>\n

The net is that many mid-size companies should be able to reduce their accounting costs considerably by not needing to bring in outside accountants to certify their compliance.\u00a0 Other than for the accountants, that may be good news. But removing the redundant check made by an external auditor doesn’t remove the requirement\u00a0for companies to keep a close tab on their internal controls.\u00a0 Compliance doesn’t go away, just some of the duplicated costs.<\/p>\n

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Much of the core of Sarbanes-Oxley regulations and the philosophy that drove it into being is about good business.\u00a0\u00a0Sarbanes-Oxley is a call to\u00a0businesses to\u00a0strengthen their attention\u00a0on internal control.\u00a0 But that’s not to say that Sarbanes-Oxley is without its problems. The…<\/span><\/p>\n

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