SEC Chairman Christopher Cox told the House Small Business Committee that he planned to propose a one-year delay in imposing Sarbanes-Oxley Section 404 requirements for small public companies to audit their internal controls.
The delay will help the commission to complete a study of the compliance costs of the SOX provision. “I intend to propose to the Commission that that we authorize a further one-year delay in implementation for small businesses in order to base our decision on final implementation of Section 404(b) on the best available cost data.”
The requirements on small businesses might eventually be waived entirely, he acknowledged, but it would be up to Congress to make the legislative change.
“Today’s decision is a major victory for those small companies struggling to deal with the costs of SOX 404,” said Nydia Velazquez, chairwoman of the committee, in a statement. “This delay will help reduce the regulatory burden on small firms and give the SEC adequate time to more thoroughly understand its impact and to make any necessary changes.”
She had recommended that the commission study the costs of SOX 404 compliance and found, from an analysis prepared by a coalition of small business groups, that companies reported that SOX 404 compliance would represent more than 3 percent of their net income.
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