WASHINGTON – Today Senators John Kerry (D-Mass.) and Olympia J. Snowe (R-Maine) expressed strong concern that the Securities and Exchange Commission (SEC) failed to provide an extension for small public companies to comply with Sarbanes-Oxley internal control regulations. Kerry and Snowe, the Chairman and Ranking Member of the Committee on Small Business and Entrepreneurship, twice wrote to the SEC and the Public Company Accounting Oversight Board (PCAOB) this year, affirming their support for the panels' efforts to ensure strong investor protections, while at the same time reducing red tape for small firms. The senators also advocated for up to one additional year for small businesses to comply with the law.
"It will take some time to fully assess how the SEC's final rules will impact small public companies, as the devil is in the details. However, I am disappointed that the SEC chose not to honor the request Sen. Snowe and I made for an extension of the compliance deadline for small businesses," said Kerry. "These companies need more time to fully digest and execute the changes in the Sarbanes-Oxley rules so they do not struggle to comply. It is not too late for the SEC to change direction and grant small companies the extension they deserve."
"I am pleased that the SEC is issuing final guidance for smaller public companies and is willing to implement many of the recommendations made last year by the Advisory Committee on Smaller Public Companies," said Senator Snowe. "However, I am concerned that the SEC has provided no assurances that the new internal controls rules will actually reduce costs for small public companies because they have not yet completed the required Regulatory Flexibility Act review of the rule. I am also disappointed that the SEC has not granted small public companies a one year delay in their filing requirements nor issued a small business compliance guide to assist small firms come up to speed with these new regulations."
Without the extension, non-accelerated filers (firms worth less than $75 million) must file their management's assessments with their annual reports closing on or after December 15, 2007. Kerry and Snowe raised concerns that additional time and resources are needed to assist the approximately 6,000 small public companies now required to comply.
According to a recent Government Accountability Office study, small public companies spend a disproportionately greater amount of time and money to comply with Sarbanes-Oxley regulations than large public companies. Firms worth $1 billion or more spend just 13 cents per $100 in revenue for audit fees, while small businesses are forced to spend more than $1 to comply with the same rules.
To read the letters Kerry and Snowe sent to the SEC and PCAOB, please click: February 23, 2007 or May 8, 2007.