SEC Proposes Delay of SOX 404 Requirements for Small Businesses

The Securities and Exchange Commission (SEC) unanimously proposed a
one-year extension of the auditor attestation requirement of Section
404(b) of the Sarbanes-Oxley Act (SOX) for small businesses, allowing
the commission to undertake and complete a cost-benefit study of the
requirements effects on smaller firms. SEC Chairman Christopher Cox
previously announced the extension in testimony before the House Small
Business Committee in December 2007. Under the proposed extension, the
Section’s requirements would apply to small public companies beginning
with fiscal years ending on or after December 19, 2009.

The
intended purpose of the cost-benefit study is to gather and analyze
real world information from companies currently in compliance with
Section 404. The study will consist of both a web-based survey of
companies subject to the Section’s provisions and in-depth interviews
with compliant companies and will be conducted predominantly by the
SEC’s Office of Economic Analysis and assisted by the Office of the
Chief Accountant and Division of Corporate Finance.

"The
Commission believes that strong investor protection and healthy capital
formation go hand in hand," said Chairman Cox. "The study will give us
the opportunity to ensure that the investor protections of Section 404
are implemented in the way that Congress intended, and do not impose
unnecessary or disproportionate burdens on smaller companies."

According
to a release, financial data from the study will not be available to
companies until March or April of 2008, meaning the study is scheduled
for completion by late summer or early fall of this year.

Jacob Barron, NACM staff writer

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