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The Public Company Accounting Oversight Board on May 24, 2007, will vote on a final standard on auditing internal control over financial reporting, as well as a related independence rule and conforming amendments to the Board’s auditing standards. If adopted, the new standard would supersede the Board’s existing auditing standard, Auditing Standard No. 2, “An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements.”

The Board also will vote on two recommendations to amend the Board’s rules on the frequency of inspections. The first recommendation is to propose for public comment an amendment to Rule 4003. The amendment would remove the requirement that the Board regularly inspect each registered public accounting firm that plays a “substantial role” in audits but does not issue audit reports. The Sarbanes Oxley Act of 2002 only requires the Board to inspect registered firms that regularly issue audit reports.

Accounting Education: PCAOB TO VOTE ON NEW STANDARD FOR AUDITS OF INTERNAL CONTROL

The US Senate’s thumping defeat of an amendment to exempt certain small and medium-sized businesses (SMBs) from compliance with Section 404 of the Sarbanes-Oxley Act is bad for business US poiticians have declared.

SMBs fell foul of political battles by those decrying the amendment as an attack on shareholder protections and others countering that SOX is crippling American businesses and preventing them from competing in a global economy.

The amendment, would have made compliance with Section 404 optional for companies with total market value of less than $700 million.

The political posturing doesn’t mean much for small and medium-sized businesses (SMBs), analyst Michael Rasmussen said. For less heat and more light on the requirements of the law, publicly traded SMBs will have to wait another month or so for the U.S. Securities and Exchange Commission and its partner in compliance, the Public Company Accounting Oversight Board (PCAOB), to approve their long-promised revised guidelines and new accounting rules.

“I think it’s par for the course now that SOX is here to stay,” said Rasmussen, who covers compliance at Forrester Research Inc. in Cambridge, Mass. “The SEC and PCAOB are working to more tightly define the scope of SOX. That is where companies will find the relief.”

ComputerWeekly: Sarbanes-Oxley defeat blow for SMBs

The Public Company Accounting Oversight Board on Friday concluded its first International Auditor Regulatory Institute.

Representatives from auditor regulators and government agencies from more than 40 countries convened on Wed., May 2, in Washington, D.C., to learn more about the PCAOB’s programs and how it carries out its mandate under the Sarbanes-Oxley Act of 2002.

The institute took place over two and a half days, with one full day devoted to discussions about the PCAOB’s inspections program. The institute also covered other activities of the PCAOB, including standard-setting, the enforcement process and international cooperation.

The Sarbanes Oxley Act directs the PCAOB to oversee and periodically inspect all accounting firms that regularly audit U.S. public companies. More than 780 audit firms currently registered with the PCAOB are located outside of the United States, spanning 80 countries.

SmartPros: PCAOB Concludes First International Auditor Regulatory Institute

The PCAOB revised Auditing Standard No. 2 mainly for small companies’ benefit. But large companies tell the regulator the new AS5 will also reduce their audit costs.

The revised auditing standard for internal control over financial reporting could bring cheaper auditing bills for large companies. Some publicly traded companies are estimating that their audit fees could be reduced by 10 percent if the proposed rule is adopted by the Public Company Accounting Oversight Board, Laura Phillips, the regulator’s deputy chief auditor, said on Friday.

Much of the focus on the revisions to Auditing Standard No. 2 has been how it can be made scalable for the 6,000 so-called non-accelerated filers that have yet to comply with the Sarbanes-Oxley Act. Those publicly traded companies with a public float of $75 million or less don’t have to have their auditor attestation reports completed until their 10-Ks are filed for fiscal years ending after December 15, 2008.

CFO.com: AS5 Could Trim Audit Bills by 10%

The Securities and Exchange Commission on Wednesday threw its weight behind finalising fresh guidelines aimed at clarifying how companies and auditors should comply with the Sarbanes-Oxley law.

The move signals that work by the US authorities to ease the burden of compliance with the 2002 law is moving into its final stage three months after proposed revisions were first floated.

At issue is how the SEC’s new guidelines for company management on implementing the law’s Section 404 internal controls provisions can be more closely aligned with separate guidance for auditors issued by the Public Company Accounting Oversight Board (PCAOB).

There is also disagreement over the extent to which external auditors should rely on a company’s own reviews of its controls.

This is testing US regulators’ willingness to adopt a more flexible, “principles-based” approach to corporate controls than those prescribed under Sarbox.

FT.com: SEC pushes clearer Sarbox guidelines

New legislation recently introduced in the US Senate aims to ensure that Sarbanes-Oxley Act regulations due to take effect in June do not disproportionately impact the nation’s small businesses.

The Small Business Regulatory Review Act of 2007 would require the Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) to take into account the burdens of small businesses before issuing final Sarbanes-Oxley rules.

Provisions in the Small Business Regulatory Review Act of 2007 would require: the SEC to conduct a small business analysis before the SEC and PCAOB publish final rules on small business internal control compliance; the SEC to publish a small business compliance guide explaining the SEC’s final rules in non-technical language; and the Government Accountability Office to assess the impact of the SEC’s final rules on small public companies two years after they are published.

“The Small Business Regulatory Review Act of 2007 will help to ensure that small stock companies do not suffer from additional unintended consequences that harm their ability to compete, innovate, grow, and, most importantly, create jobs,” stated Olympia J. Snowe (R-ME), Senate Small Business and Entrepreneurship Committee Ranking Member, who introduced the bill. “Our nation’s small stock companies are the cornerstone of our entrepreneurial economy, and it is essential that we carefully address the regulatory barriers that impede their growth.”

Investorsoffshore: Snowe Bill To Mitigate Sarbanes-Oxley Impact On US Small Firms

Richard Wasielewski, Nortech Systems, Inc. (NASDAQ:NSYS) vice president and chief financial officer, testified Wednesday before a U.S. Senate Committee on Small Business and Entrepreneurship that Sarbanes-Oxley (SOX) regulatory requirements have both helped Nortech improve its internal controls and financial reporting practices but also that the new requirements have added considerably to the company’s costs.

Wasielewski appeared before the committee at the invitation of U.S. Senator Norm Coleman (R-Minn.), to address the significant time and money small public companies, such as Nortech Systems, invest in Sarbanes-Oxley compliance.

The hearing preceded the introduction of new legislation, The Small Business Regulatory Review Act of 2007 (S.1153), the following day by Senate Small Business and Entrepreneurship Committee Ranking Member Olympia J. Snowe (R-ME) and Senator Coleman. The new legislation would require the Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB) to take into account the burdens faced by small businesses before issuing final Sarbanes-Oxley rules and ensure that SOX regulations due in June 2007 do not disproportionately impact the nation’s small publicly traded companies

Broadcast Newsroom: Nortech Systems’ CFO Testifies on Sarbanes-Oxley Reform

Securities and Exchange Commission Chairman Christopher Cox isn’t ruling out further delays in applying stricter accounting requirements on small public companies but said such relief isn’t the option preferred by regulators.

About 6,000 smaller public companies have yet to come under two requirements adopted by Congress in 2002 as part of the Sarbanes-Oxley Act, calling for companies to make an annual assessment of their internal financial-reporting controls, with further review by the company’s outside auditor. Regulators have delayed applying that portion of the law to smaller companies amid complaints that compliance has been very costly and time-consuming for larger companies. In response to such complaints, the SEC and Public Company Accounting Oversight Board are working to make the requirement less burdensome for all companies.

SmartPros: SEC Chairman: Sarbanes-Oxley Relief for Small Firms Not First Choice

BIO Reiterates Support as Senate Small Business Committee Considers Changes

WASHINGTON–(BUSINESS WIRE)–As Securities and Exchange Commission (SEC) Chairman Christopher Cox and Public Companies Accounting Oversight Board (PCAOB) Chairman Mark Olsen prepare to testify before the Senate Committee on Small Business & Entrepreneurship today, BIO reiterated its support for changes to the Sarbanes-Oxley Act of 2002 (SOX) that will specifically benefit small biotech companies.

“The biotechnology industry was particularly hard-hit by the complex and burdensome regulations imposed by SOX’s Section 404. We have supported changes to its implementation, so our companies can refocus on our most important mission of researching and developing new therapies to improve human health, expand our food supply, and provide new sources of energy,” said BIO President and CEO Jim Greenwood. “We are pleased to see that agency and congressional leaders are listening.”

Yahoo!Finance: Biotech Research and Development Will Benefit from Sarbanes-Oxley Changes

Commissioners gave the SEC staff the go-ahead to work with the PCAOB on making the proposed internal-control auditing standard less prescriptive and more aligned with Section 404.

The Securities and Exchange Commission is sending its accounting staff to work with the Public Company Accounting Oversight Board on additional revisions to the auditing standard that has been criticized by public companies and legislators for creating costly audits of internal controls.

At a Wednesday SEC hearing, staff members of the Office of the Chief Accountant asked the commissioners for permission to work with the PCAOB to address several concerns that were raised during the current public comment period on the revised Auditing Standard No. 2 — which both regulators loosely refer to as AS5. Saying the staff will be “fine-tuning” AS5, the commissioners voted unanimously on all the staffers’ requests.

The staff will now work on matching the tone and wording of AS5 with the SEC’s revised guidance for company management on complying with Section 404, the Sarbanes-Oxley Act’s provision for management’s assessment of internal controls over financial reporting. They will also work with the PCAOB to incorporate more principles-based language into AS5, clarify how the new standard is scalable for companies of all sizes, and adopt a less prescriptive approach for how auditors will decide to use the work of others, such as a company’s internal auditors.

CFO.com: SEC Tells Staff to Revise AS5