The Deal.com reports today that Securities and Exchange Commission Chairman Christopher Cox has "said emphatically that the most controversial provisions of the 2002 Sarbanes-Oxley law mandating strict corporate disclosure remain a good idea and exemptions for small companies won't be coming."
"Instead, a few adjustments to the SEC's rules will allow the law to be implemented successfully, he said, especially for the small companies that appear most burdened by the heavy costs of hiring outside auditors to verify compliance."
The online publication also reported that corporate participants at the SEC conference on the subject "made it clear that the cost of complying with the 404 provision, internally and in terms of fees paid to outside audit firms, continues to outweigh the benefits to investors. A recent study by Financial Executives International found that 85% of surveyed chief financial officers convinced that the benefits of SOX internal control rules do not justify their cost."
One recent survey estimated that the aggregate cost of implementing and complying with SOX provisions will reach $20 billion by the end of 2006, and that public companies will spend an average of $3.8 million in 2006 to comply with SOX's Section 404 provisions.
For smaller companies, the load is a heavy one. But the current conventional wisdom in Washington appears to be that smaller companies are ones that most need upgraded financial systems and controls.
Technorati tag: Investor Relations
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