A handful of boldface names from the financial world lent their signatures to a letter to federal regulators, asking that no public company be exempted from the internal controls provisions of the Sarbanes-Oxley Act.
Former Securities and Exchange Chairman Arthur Levitt, former Federal Reserve Chairman Paul Volcker and former U.S. Comptroller General Charles Bowsher joined John Biggs, former chairman and chief executive of TIAA-CREF, and John Bogle, former chairman of the Vanguard Group Inc., in signing the letter.
The Feb. 13 letter was addressed to current SEC Chairman Christopher Cox and the acting chairman of the Public Company Accounting Oversight Board, William Gradison.
Smaller companies have complained that the rules under SOX Section 404 are disproportionately costly and burdensome for them. Last December, an SEC advisory panel recommended a change to the provisions exempting an estimated 80 percent of public companies from at least part of the rules. Companies with market values less than $125 million would be exempted from the rules, while other small public companies would face relaxed variations.
"Such a recommendation simply goes too far," the group wrote. "When new accounting and corporate-fraud scandals develop, as they surely will, people will ask who was responsible for a policy decision resulting in such sweeping exemptions."
They later added, "[In passing SOX], Congress adopted a reasonable approach to achieve real reform, not just the appearance of reform. It would be unfortunate now if the SEC and PCAOB undercut the effectiveness of congressional legislation through misguided regulatory action."
The SEC advisory panel is scheduled to meet today in Washington to discuss the draft of its final report.The five men all sat on a subcommittee for the audit and accounting section of the 2003 Conference Board Commission on Public Trust and Private Enterprise report. The report investigated the circumstances that lead to a series of corporate scandals a year earlier.
