SOX Center

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

Former Senator Paul Sarbanes, D-Md., who, as the head of the Senate Banking Committee, co-authored the sweeping Sarbanes-Oxley reform act said he supports developing additional guidance for smaller filers but, not surprisingly, dismisses exempting those companies from compliance with the legislation’s rigid Section 404.

“Stop and think about that for a moment,” said Sarbanes in a speech before attendees at a conference on financial reporting and governance presented by Pace University’s Lubin School of Business, here. “That would mean that you would be exempting 80 percent of public companies from compliance.”

Sarbanes referred to recent pronouncements from the Securities and Exchange Commission and the Public Company Accounting Oversight Board regarding potential streamlining of the 404 internal controls provision, which small filers have complained is disproportionate to them in terms of cost and manpower.

WebCPA: SOX Co-Author Supports Tweaking Act, Not Exemption

Republicans attempted to make compliance optional for companies with a market value of less than $700 million.

The U.S. Senate on Tuesday defeated a Republican attempt to weaken 2002’s post-Enron Sarbanes-Oxley laws by making it optional for many corporations to comply with a controversial section on internal controls. By a vote of 62-35, the Senate set aside an amendment to make compliance with Sarbanes-Oxley’s Section 404 optional for companies with total market value of less than $700 million.

The amendment was offered by South Carolina Republican Jim DeMint, who tried to attach it to a bill on the Senate floor that was focused chiefly on boosting investment in research, and improving science, engineering and math education.

In response to the amendment, defenders of Sarbanes-Oxley proposed and won passage, by a vote of 97-0, of a symbolic Senate statement expressing support for efforts already under way by federal regulators to fine-tune Section 404.

CNN Money: Senate rejects Sarbanes-Oxley change