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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

A global survey of 800 internal audit chiefs has revealed that the pressures of regulatory compliance have compromised their ability to complete thorough audits.

The research – whose respondents were from North America ( 51%), Europe (17%), Latin America (15%), Asia-Pacific (9%), the Middle East (8%) and Africa (55%) - produced by business analysis firm ACL Services, highlighted the need for companies to continuously monitor their internal controls.

Amidst compliance deadlines, key managers were pulled in from various parts of companies to work on meeting the deadlines, causing monitoring of other areas of business to be neglected.

• The survey of companies, with revenues ranging from $500m (£261m) to over $10bn, revealed that:
• One in five audit executives felt their department’s independence was compromised by their involvement in compliance programs
• A total of 36% of organisations have adopted a continuous auditing approach across either all or within select business processes
• 39% plan to implement continuous auditing in the near future
• A shortage of skilled internal audit staff was identified as the most critical challenge to fulfilling the internal audit mandate (68 percent)
• Other major global challenges identified were the complexity of the IT environment (65%) and the lack of ownership for controls and related risk (62 percent)

President and CEO of ACL Services Harald Will, said a major concern was that the independence of internal audit was especially compromised by the manual effort of compliance.

‘Many felt technology could be applied to overcome this, but the challenge of the shortage of skilled staff also came up.

‘Whether it was a Sarbanes-Oxley deadline or something else, there is panic as the deadline looms. Staff are pulled in from other parts and then rush to complete filing and attempt to return to business as usual.

AccountancyAge:Internal audit compromised due to regulatory burdens