The US Senate Banking Committee has passed
legislation that will permanently exempt small listed companies
from complying with Section 404(b) of the Sarbanes-Oxley (SOX)
Act.
SOX Section 404(b) requires US listed
companies to implement and report on internal controls, and have
these reports audited.
The US Securities and Exchange Commission
(SEC) previously delayed the implementation of 404(b) for companies
with a market capitalisation of less than $75 million – known as
non-accelerated filers – to allow them added time to prepare.
The final deadline for implementation was 15
June this year.
Despite earlier pressure from lobby groups
such as the Center for Audit Quality and the CFA Institute for the
committee to resist SOX exemption, the the Dodd-Frank BIll was
passed and is expected to be signed into law by President Barack
Obama.
BDO US said the bill could potentially be
expanded to exempt larger businesses from complying with Section
404(b) because it requires the SEC and the comptroller general to
determine, in the coming months, how to reduce compliance costs for
companies whose market capitalisation is between $75m and
$250m.
“While we firmly believe that all public
companies can benefit from strong internal controls, the inclusion
of Section 989G in the new law demonstrates that Congress is paying
attention to the pleas of smaller public companies to reduce their
compliance costs in a weak economy,” BDO US national SEC director
Wendy Hambleton said.
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