October 05, 2004
Small Business Financing Forum Held by SEC Yields Recommendations
Each year the SEC holds a forum in Washington on Small Business Capital Formation. It is an opportunity for smaller businesses to tell their story directly to the SEC. Some of the formum's recommendations deal with requested delays and review of Section 404 for smaller companies.
It is true that smaller companies feel the burden of the Sarbanes-Oxley even more than larger business due to their smaller staffs and fewer resources to spare. However, one has to continue to ask if a small company would not find it easier to document and test internal controls because they are smaller. Therefore, it is less complex and would take less time. Further, doesn't it make sense to fix your internal control issues when you are smaller so that they do not cost more to fix later when you are larger. Good internal controls just make sense--no matter what size your organization is.
A few key recommendations from the Forum were:
"3. Compliance with 404 should be extended at least two years for non-accelerated filers. During that two year period, SOX 404 should be subject to ongoing monitoring for cost and benefit by the SEC.
5. Recommend that the SEC Commissioners implement a further deferral of 404 implementation for registrants reporting under Regulation S-B until fiscal years ending on or after 12/15/07 to better evaluate the impact of 404, including any further modifications to 404, and to give smaller businesses with smaller resources the opportunity to learn from the experience of companies traded on national exchanges and to allow their consultants to obtain qualified staff. Further, recommend that management be required to report on the progress of 404 implementation during the FY2006 reporting cycle within the registrant's '34 Act filings in a manner similar to the previous Y2K disclosures.
6. That the SEC give higher priority to the needs of small business. "
Click here for the complete article.
To find out how your company can effectively and affordably comply with Sarbanes-Oxley, see www.issuescentral.com or call (416) 977-1496.
It is true that smaller companies feel the burden of the Sarbanes-Oxley even more than larger business due to their smaller staffs and fewer resources to spare. However, one has to continue to ask if a small company would not find it easier to document and test internal controls because they are smaller. Therefore, it is less complex and would take less time. Further, doesn't it make sense to fix your internal control issues when you are smaller so that they do not cost more to fix later when you are larger. Good internal controls just make sense--no matter what size your organization is.
A few key recommendations from the Forum were:
"3. Compliance with 404 should be extended at least two years for non-accelerated filers. During that two year period, SOX 404 should be subject to ongoing monitoring for cost and benefit by the SEC.
5. Recommend that the SEC Commissioners implement a further deferral of 404 implementation for registrants reporting under Regulation S-B until fiscal years ending on or after 12/15/07 to better evaluate the impact of 404, including any further modifications to 404, and to give smaller businesses with smaller resources the opportunity to learn from the experience of companies traded on national exchanges and to allow their consultants to obtain qualified staff. Further, recommend that management be required to report on the progress of 404 implementation during the FY2006 reporting cycle within the registrant's '34 Act filings in a manner similar to the previous Y2K disclosures.
6. That the SEC give higher priority to the needs of small business. "
Click here for the complete article.
To find out how your company can effectively and affordably comply with Sarbanes-Oxley, see www.issuescentral.com or call (416) 977-1496.
