Three congressmen plan to introduce a bill tomorrow that they say will ease the financial burdens felt by smaller businesses affected by the internal-controls provision of the Sarbanes-Oxley Act.
Reps. Gregory Meeks (D-N.Y.), Tom Feeney (R-Fla.), and Pete Sessions (R-Tex.) are reintroducing the Competitive and Open Markets that Protect and Enhance the Treatment of Entrepreneurs Act, which did not get past the committee stage last year. “The bill is designed to reduce some of the financial burdens that have been put on small- to mid-cap businesses as a part of attesting to the soundness of their internal-control functions,” says a press release put out by Meeks’s office.
The 2006 version of the bill would have allowed companies with market capitalization of less than $700 million to skip the Section 404 assessment requirement — and subsequent auditor attestation requirement — for internal controls over financial reporting.
Sarbox’s Section 404 has been criticized by financial executives for being too costly and time-consuming, particularly for companies that have meager accounting staffs.
It’s an issue that has cut across party lines in Congress. Senators have also joined in the anti-Section 404 fray this year: Olympia Snowe (R-Maine) and John Kerry (D-Mass.) recently sent a joint comment letter to the Securities and Exchange Commission and Public Company Accounting Oversight Board asking the regulators to further delay the deadline for the smallest public companies to comply with Sarbox. The SEC has pushed up the deadline several times for companies with a market capitalization of less than $75 million.