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Challenging optimism about the efficiency of new auditing standards, the House Small Business Committee’s chairwoman called on federal regulators to give thousands of small public companies even more time to comply with a controversial section of the 2002 Sarbanes-Oxley law.

Rep. Nydia Velazquez, D-NY, said on Tuesday that the Securities and Exchange Commission and the Public Company Accounting Oversight Board must implement the internal-controls section of the law in a way that “does not hamper America’s competitiveness.” She said that “postponing the compliance deadlines for at least an additional year would allow us to make this determination.”

The 2002 law requires company management to evaluate internal controls over financial reporting, subject to review by outside auditors. The SEC has delayed applying the rules to more than 6,000 small companies at least four times, most recently citing a need to make the rules more efficient. Under current policy, small public companies will begin submitting management reports in 2008, and the auditor reports in 2009.

Nasdaq: House Lawmaker Calls On SEC To Delay Internal-Controls Rules

Business advisors Grant Thornton LLP have applauded the SEC and the PCAOB for their efforts in addressing the legitimate concerns of the capital markets while still reinforcing the value of Sarbanes-Oxley to investors.

“We believe that the new guidance and auditing standards strike an appropriate balance between efficiency and effectiveness, though it will take time to fully realize the effects,” the company said in a statement.

It added: “We believe that the current efforts of the Committee of Sponsoring Organizations of the Treadway Commission (COSO) will help organizations more efficiently monitor the effectiveness of their internal control systems throughout the year. COSO recently commissioned Grant Thornton LLP to develop guidance - scheduled for completion in early 2008 - that will include in-depth guidance for implementing the monitoring component of COSO’s Internal Control — Integrated Framework.”

A public discussion document regarding this guidance should be available in June 2007.

Investorsoffshore: Advisors Applaud SEC, PCAOB For Addressing Sarbanes-Oxley Concerns

Today Senators John Kerry (D-Mass.) and Olympia J. Snowe (R-Maine) called for a delayed implementation of the Sarbanes-Oxley Section 404 requirements for small public firms to ease the burden on complying with the expected new auditing standards. Section 404 requires firms to establish internal control frameworks and to file internal control reports. The Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) proposed rules and guidance late last year addressing this section and are accepting public comments through Monday, February 26th.

“We can have strong corporate accountability standards while also reducing the burden for small firms who spend more time and money earned than big companies to comply with Sarbanes-Oxley,” said Kerry. “We must do everything possible to appropriately reduce red tape in order for small firms to grow and become dynamic public companies.”

Yahoo!: Kerry, Snowe Urge Sarbanes-Oxley Extension for Small Firms