Interviews
SOX costs still burden to small companies - Chamber study
12 Nov '07
2 min read
The U.S. Chamber of Commerce released a study showing that, despite recent reforms, SOX Section 404 disproportionately burdens small businesses. The Chamber again is calling for a one-year delay in small company implementation and urging Congress to hold hearings on the issue.
"Our study shows why small companies complying for the first time with SOX 404 should not be the guinea pigs for the improved rules adopted by the SEC and the PCAOB," said Michael J. Ryan, Jr., senior vice president and executive director of the U.S. Chamber's Center for Capital Markets Competitiveness.
"We continue to support strong internal controls and believe that the improved rules, if implemented as intended, will address the challenges companies face."
Unless the SEC or Congress takes action, the current timeline will require nonaccelerated filers with a calendar year-end to begin complying with SOX 404(a) in early 2008 and SOX 404(b) in early 2009.
While the SEC predicted that nonaccelerated filers would not engage their auditors for SOX 404 compliance until the first half of 2008, more than 83% of respondents have already done so with respect to SOX 404(a) and more than 58% have done so with respect to SOX 404(b).
The study also shows that more than half of the companies responding with less than $75 million in market value will spend more than 3% of net income on SOX 404(a). Sixty three percent anticipate a cost increase in the next year due to compliance with 404(a) and 404(b). Finally, more than 58% of the respondents believe that SOX 404 will not help detect and prevent fraud.
The U.S. Chamber of Commerce is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.
"Our study shows why small companies complying for the first time with SOX 404 should not be the guinea pigs for the improved rules adopted by the SEC and the PCAOB," said Michael J. Ryan, Jr., senior vice president and executive director of the U.S. Chamber's Center for Capital Markets Competitiveness.
"We continue to support strong internal controls and believe that the improved rules, if implemented as intended, will address the challenges companies face."
Unless the SEC or Congress takes action, the current timeline will require nonaccelerated filers with a calendar year-end to begin complying with SOX 404(a) in early 2008 and SOX 404(b) in early 2009.
While the SEC predicted that nonaccelerated filers would not engage their auditors for SOX 404 compliance until the first half of 2008, more than 83% of respondents have already done so with respect to SOX 404(a) and more than 58% have done so with respect to SOX 404(b).
The study also shows that more than half of the companies responding with less than $75 million in market value will spend more than 3% of net income on SOX 404(a). Sixty three percent anticipate a cost increase in the next year due to compliance with 404(a) and 404(b). Finally, more than 58% of the respondents believe that SOX 404 will not help detect and prevent fraud.
The U.S. Chamber of Commerce is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.
U.S. Chamber of Commerce
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