Thursday, May 18, 2006

SEC to small companies on SOX: Not off the hook

In rejecting the recommendations of its panel, the SEC issued a strong endorsement for the Sarbanes-Oxley law. The act was passed in the wake of the corporate fraud and accounting scandals at Enron Corp. and other companies that lost millions of dollars for shareholders and lined the pockets of some top executives.

The commission did, however, acknowledge that its vague guidance on the SOX rules and the overzealousness of the Public Company Accounting Oversight Board (PCAOB), which has led to the enrichment of many accounting firms and consultants, needs fixing.

SEC Chairman Christopher Cox said in a statement May 17: "By providing practical guidance to companies, by working with the Public Company Accounting Oversight Board on their forthcoming revised standard for auditors, and by examining how the PCAOB inspection process is succeeding in increasing the efficiency and cost-effectiveness of the audit process, we will take a giant step toward 'getting it right' when it comes to Section 404 compliance."

SEC to small companies on SOX: Not off the hook

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