House Votes to Give Small Companies More Time on Sarbanes-Oxley
Bloomberg
By Jesse Westbrook
June 28 (Bloomberg) -- The U.S. House of Representatives moved toward giving small companies an additional year to adhere to the Sarbanes-Oxley Act's accounting rules, which are being revised by the Securities and Exchange Commission.
House lawmakers voted 267 to 154 to delay a deadline for companies with less than $75 million in publicly available shares to start complying with the law's audit rules. The measure was attached to a $21.4 billion spending measure that funds the White House, the SEC and other agencies.
U.S. Representative Scott Garrett, a New Jersey Republican, proposed the amendment out of concern the audit rules will impose disproportionate expenses on small companies. The vote indicates lawmakers don't think the changes being implemented by the SEC go far enough in reducing compliance burdens.
President George W. Bush signed Sarbanes-Oxley into law in 2002 after accounting scandals at Enron Corp. and WorldCom Inc. eroded investor confidence. Under the law, corporate managers must assess whether they have sufficient safeguards to catch fraud and bookkeeping errors. They must also have those controls certified by an outside auditor.
Small companies are supposed to be in compliance with the management portion of Sarbanes-Oxley this year in financial statements filed with the SEC on or after Dec. 15. The SEC would require the auditor assessments starting in 2009. Today's amendment would delay both deadlines by a year.
The SEC has been under fire from business groups, which blame Sarbanes-Oxley for driving companies to less-regulated markets overseas.
The U.S. Chamber of Commerce wrote a letter to House lawmakers dated yesterday urging them to support the extension. The nation's biggest business lobby said it may consider how members of Congress voted on Garrett's amendment in releasing its annual ``How They Voted'' scorecard, the letter said.
The Senate must vote on its own version of the appropriations bill.
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