Business may get Sarbanes-Oxley relief

[underpants]

http://money.cnn.com/2006/11/10/news/companies/sarbanes_oxley/

Regulators reportedly proposing changes in rules that businesses argue cost them an average of $3.8 million without improving accounting accuracy.


NEW YORK (CNNMoney.com) -- Businesses that have been complaining about the cost of complying with the Sarbanes-Oxley corporate reporting regulations will get some, but not all, of the relief they've been seeking, according to a published report.

The Wall Street Journal reported Friday that federal regulators have said they will propose guidance next month to help companies and auditors interpret one section of the law, passed in the wake of the Enron accounting scandal, in a way likely to save them time and money.

The regulation, known as Section 404, requires companies first review their own systems for ensuring accurate financial reports and then have them tested by outside auditors. The Journal reports that companies have complained the rule requires them to spend many hours and that large companies spent an average of $3.8 million each in fiscal 2005 complying with the rule and documenting things that have nothing to do with the integrity of their financial statements.

The Securities and Exchange Commission has already acknowledged problems with the rule. The paper reports SEC Chairman Christopher Cox wrote a letter to the Public Company Accounting Oversight Board, the auditing industry's overseer, in which he said the SEC agreed that the standard for complying with the rule needed to be focused on matters that are relevant to a company's financial results. He also urged that the rule be adapted to companies based on the company's size.

[SteppingRazor]

1. Meh, I don't have much of a problem with this...

if you know anyone who works at a big company, you probably know what a PITA Sarbanes-Oxley is. I'm certainly for heavy corporate accountability -- and even heavy government regulation in some major industries (healthcare and insurance spring immediately to mind, as well as the more-obvious energy) -- but Sarbanes-Oxley has an awful lot of unnecessary red tape.

[DoYouEverWonder]

2. Time to restore some common sense

to government.

If something doesn't work, I'm all for fixing it.

[underpants]

4. Yes but

Come on you knew there was going to be a "but"

I know someone who will probably lose their job if this goes through. Many people will.

Aside from that I want you to keep something in mind--since S-OX has been in place corporations have seen record profits. Some of that may be due to many other factors but it is hard to argue with the cause and effect relationship here...that being that keeping all these "highly educated" executives busy is the best thing that has ever happened to most of these corporations.

:bounce:

[SteppingRazor]

5. OK, couple things...

1) I'm very, very sorry about your friend. But, honestly, should bureaucratic red tape remain in place solely on the basis of the jobs it maintains? Obviously, if your friend is invovled in carrying out the mandates of Sarbanes Oxley, he/she is a skilled worker. I know it's terrible to say, but I'm sure he/she will be able to find a new job.

2) I think it's pretty easy to argue that there's no causal relationship between Sarbanes Oxley and record profits. But then, I'm assuming you're pulling my leg here :evilgrin:

[underpants]

6. 1)

I know I know but that was why I was aware of this story.

2) How many Execs have you dealth with??? :rofl:

Yes I am just kidding....sort of

[GregW]

3. I hate SOx with a passion

:puke:

[karynnj]

7. I would expect a lot of change on many things,

because the Democrats already have bills that now can be passed to correct problems. The WSJ focused on large companies, but the costs could be more detrimental to small busnesses.

For small businesses, here is what the soon to be chairman of the committee already proposed. The idea of helping the companies pay for it until simpler procedures are found is clever - it gives the administration a huge amount of incentive to give the task force a dead line to prevent it from eating as much time as task forces typically can and to prevent the burden from sinking companies.

http://kerry.senate.gov/v3/cfm/record.cfm?id=264068

WASHINGTON – Senator John Kerry (D-MA) introduced legislation today that would reduce the regulatory burden on small public companies and assist them with the costs of implementing Sarbanes-Oxley regulations.
The Small Business Sarbanes-Oxley Assistance Act of 2006, introduced by Senator Kerry, would authorize the U.S. Small Business Administration to award federal grants to small businesses to help lessen the burden of the cost of complying with Sarbanes-Oxley regulations. It also creates a task force, assembled by the SBA Chief Counsel for Advocacy, and comprising of representatives from the U.S. Securities and Exchange Commission (SEC) and others, to report semi-annually on how to reduce the regulatory burden and assist small public companies complying with Sarbanes-Oxley.

“To help our economy grow, we need to help small businesses comply with the Sarbanes-Oxley regulations by reducing their regulatory burden where possible and providing federal assistance to those who need additional help. Congress passed a law to create accountability and transparency in the corporate structure, and it’s worked,” Senator Kerry said. “But too many small companies don’t have the resources or the expertise to do this on their own. This bill will help small businesses abide by the law and continue to focus on creating jobs and growing our economy.”

Senator Kerry’s bill follows a recent U.S. Government Accountability Office (GAO) report that found small public companies to be spending considerably more on implementing Sarbanes-Oxley, particularly Section 404 of the bill, which requires firms to establish internal control frameworks and to file internal control reports. The report found that firms with less than $75 million in market capitalization were spending $1.14 in audit fees per $100 of revenue, compared to just $.13 per $100 for firms with greater than $1 billion in market capitalization.

“The task force will make it easier for small businesses to comply with the Sarbanes-Oxley by reducing their regulatory burden in the future.” Senator Kerry said. “In the meantime, if Congress is asking these small firms to take on the costly burden of complying with Sarbanes-Oxley, the least we can do is chip in and help pay for it.”