Thursday, May 18, 2006

SEC Denies Sarbanes-Oxley Exemption

Under Sarbanes-Oxley, it's mandated that all companies document the internal controls in place to prevent the mismanagement or manipulation of financial documents, and they’re also required to hire an external auditor to confirm those controls are efficient. The act was passed in response to the high-profile Enron accounting fraud scandal of the early 2000s, in which investors were bilked out of billions of dollars.

Since the act's inception, business owners and lawmakers alike have questioned whether it should be applied to small or mid-sized public enterprises the same way it is to larger firms, according to the Post. Many such critics have requested that the SEC exempt small businesses completely, the Post reports.

In response, the SEC has decided to give the smallest firms a few additional months to be in compliance with the act.

SEC Denies Sarbanes-Oxley Exemption

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