The Securities and Exchange Commission is expected to give small public companies another extension to comply with the internal control rule outlined in the Sarbanes-Oxley Act, according to published reports.
Following a recommendation made by the SEC's advisory committee for smaller public companies last month, the SEC plans to extend the compliance date for companies with market capitalizations up to $75 million, to July 2007.
In March, the SEC granted a one-year reprieve for smaller public companies to finish assessing the controls they have in place to prevent accounting mistakes and fraud. Required as part of Sarbanes-Oxley, a company's external auditor must then attest to those controls and file a report on them as part of the company's annual report.
The internal controls rule has been criticized by businesses as being overly costly -- constricting their plans for growth and forcing them to explore ways of cutting operating costs.
The SEC established the advisory committee in December 2004 to examine the impact of federal securities laws on smaller public companies, with a goal of assuring that the costs and burdens of regulation are commensurate with the benefits to investors and the public. The co-chairs of the committee are Herbert S. Wander and James C. Thyen. The committee is scheduled to issue a final report by April 2006.
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