The Securities and Exchange Commission Advisory Committee on Smaller Public Companies has published an exposure draft of its final report, outlining changes to the Sarbanes-Oxley Act for micro-cap and small-cap public companies.

In late February, the advisory panel gave its preliminary backing to easing the internal controls provisions of SOX for small public companies after holding a series of meetings and hearings, which began in April 2005.

The committee will consider any comments its receives on the draft before finalizing the report's recommendation, which are due to the SEC by April 23.

The exposure draft is available at www.sec.gov/rules/other/33-8666.pdf . The comment period ends on April 3.

Smaller companies have complained that the rules under SOX Section 404 are disproportionately costly and burdensome for them. The proposed changes would free an estimated 80 percent of public companies, with market values less than $125 million, from at least part of the rules.

The report says that the internal controls provision of SOX has had a d isproportionate impact, where the smaller the public company is, the larger the financial hit it takes in meeting the standards. The panel said that, while costs generally declined following the first year of the SOX implementation, a recent study by the Big Four firms found that second year total costs for public companies with a market capitalization between $75 million and $700 million averaged approximately $900,000.

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