WASHINGTON – After over a year of urging from Senator John Kerry (D-Mass.) and Olympia J. Snowe (R-Maine), today the U.S. Securities and Exchange Commission (SEC) agreed to provide small businesses with an additional one year extension to comply with the Sarbanes-Oxley Section 404(b) auditor attestation requirements.
Last year, Kerry and Snowe held a hearing focusing on the impact of Sarbanes-Oxley regulations on small businesses and wrote three letters to the SEC seeking additional time for small firms to comply while preserving the intent of the 2002 law.
“The SEC made the right call by providing small businesses with additional time to comply with Sarbanes-Oxley,” said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship. “Smaller firms continue to face higher costs in meeting these reporting requirements. After this extension, all public companies should fully comply with the law.”
“I applaud the SEC for taking action to shield small businesses from the overly burdensome requirements of the Sarbanes-Oxley Act,” said Senator Snowe, the Ranking Member of the Senate Committee on Small Business and Entrepreneurship. “I am also pleased that the SEC will complete a study on the costs and benefits of applying the law to small businesses. The SEC should refrain from implementing any new regulations until such an evaluation is complete. Given the state of our economy, small businesses should be focused on innovation and job creation instead of complying with ill-conceived regulations.”
Small firms worth less than $75 million face a higher burden than larger firms in complying with the Sarbanes-Oxley regulations. In 2006, restatements of financial results for large companies decreased by 20 percent, while restatements for the smaller firms increased by 42 percent due to the disproportionately higher cost and time needed to comply.