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Senate Passes JOBS Act for Small Business

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By Michael Cohn
March 23, 2012

The Senate has passed the Jumpstart Our Business Startups Act and sent it back to the House with a few extra protections for investors added.

The Senate voted 73 to 26 to pass the JOBS Act on Thursday, adding a provision to provide more safeguards to investors involved in so-called “crowdfunding.” Still, watchdog groups are continuing to sound the alarm about how the bill would exempt so-called “emerging growth companies” with annual revenue of up to $1 billion from Sarbanes-Oxley requirements for audits of internal controls and other investor protections (see Small Business Bill Would Weaken Audit Protections).

The Center for Audit Quality and the Council of Institutional Investors sent a letter Thursday to the Senate urging lawmakers to remove the provisions that would bypass the independent accounting and auditing standard-setting process.

Noting that investors’ confidence in the financial information released by public companies “is derived from an independent, open and transparent public due process in which potential new standards and their impacts are carefully considered with input from all interested parties,” the letter argued, “to circumvent this process would undermine investor confidence and the quality of financial reporting—the foundation of our capital market system.”

CAQ executive director Cindy Fornelli was also one of the panelists Thursday on the second day of the two-day meeting of the Public Conpany Accounting Oversight Board testifying about the PCAOB’s concept release on mandatory auditor rotation (see PCAOB Hears Pros and Cons of Auditor Rotation). “Audit quality has improved, but we must not let down our guard,” she said.

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