Financial Executives International's Small Public Company Task Force has issued a statement that the requirements of the Sarbanes-Oxley Act are hurting the competitiveness of smaller public companies. The group called for more practical solutions for such companies that still protect investors.
On Dec. 14 the Security and Exchange Commission's Advisory Committee on Smaller Public Companies will meet, at which time the SEC is scheduled to consider possible changes to current rules for smaller companies.
"As currently designed, the implementation of Section 404 of Sarbanes-Oxley drains the limited resources of small companies particularly hard," said Richard Brounstein, chairman of the FEI task force, in a statement.
According to FEI survey data collected from public companies in March, companies with annual sales between $25 million and $99 million have seen their audit fees jump 71 percent from Section 404-related work. Those with revenue between $100 million and $499 million saw audit fees rise 66 percent, compared with an average increase of 47 percent for the largest public companies surveyed."The regulatory requirements of 404 have taken a 'one size fits all' approach and amount to a barrier to the growth of smaller companies," Brounstein said. "It would be detrimental not to pursue an effective alternative that preserves the intent and spirit of Sarbanes-Oxley while being more sensitive to smaller companies. We look forward to the Advisory Committee recommendations."
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