SOX Reprieve for Small Business
Small businesses this week were given another one-year reprieve from strict auditing requirements created five years ago in the wake of Enron, WorldCom and other corporate accounting scandals.
At a federal hearing on Wednesday, Securities and Exchange Commission Chairman Christopher Cox said the agency would delay regulations imposed on small public firms under Section 404 of the Sarbanes-Oxley Act until 2009, when a cost analysis is expected to be complete.
Section 404 currently requires companies to hire outside auditors to report on internal financial controls, a step critics say is disproportionately costly and time-consuming for smaller businesses. Last year, the agency eased the regulations by allowing company officials to identify potential risks in their bookkeeping and focus efforts only on those areas.
"The reforms we have made to the SOX 404 process will be of direct benefit to America's small businesses," Cox told House Small Business Committee members this week. "We've wrenched it away from expensive and unproductive make-work procedures that waste investors' money and distract attention from what's genuinely material."