October 03, 2005
Recent SEC Small Business Advisory Committee Meeting Says Change for Small Companies is on the Way
At the recent SEC meeting (Sept 19/20) in San Francisco, the Small Business Advisory Committee was critical of the efforts of upcoming new COSO guidance for smaller public companies. The Committee Chair, Janice Dolan, specifically asked the Chair of COSO if they were the right body to come up with a small business framework.
Dolan indicated that if what COSO comes up with is not sufficient (for Section 404 compliance), then the Committee will develop a framework itself for smaller public companies. Janice, do you think this will ghettoize the smaller public companies if they are held to a lesser standard?
An excerpt on the topic is here:
"But SOX was designed as one-size-fits-all answer to the corporate accounting scandals, and many are arguing that a one-size-fits-all solution isn’t the answer as small companies are unduly burdened by SOX’s compliance and reporting requirements. To adhere to SOX’s requirements, companies have to invest a significantly larger proportion of their capital into SOX compliance.
This has left many small public companies crying foul. Critics say that small companies with smaller staffs and where managers often wear numerous hats are unable to dedicate the amount of time and resources required (estimated at as many as 1,000 or more additional staff hours) to adhere to SOX. Large public companies (those with capitalization of $1 billion or more), on the other hand, are reporting having to dedicate between 3-5 percent of revenue to comply SOX – quite a large output but in many ways a drop in the bucket considering their size. " For the complete article, click here.
If your company, large or small, needs help in complying with Section 404, see www.issuescentral.com to review the Compliance Playbook(tm).
Dolan indicated that if what COSO comes up with is not sufficient (for Section 404 compliance), then the Committee will develop a framework itself for smaller public companies. Janice, do you think this will ghettoize the smaller public companies if they are held to a lesser standard?
An excerpt on the topic is here:
"But SOX was designed as one-size-fits-all answer to the corporate accounting scandals, and many are arguing that a one-size-fits-all solution isn’t the answer as small companies are unduly burdened by SOX’s compliance and reporting requirements. To adhere to SOX’s requirements, companies have to invest a significantly larger proportion of their capital into SOX compliance.
This has left many small public companies crying foul. Critics say that small companies with smaller staffs and where managers often wear numerous hats are unable to dedicate the amount of time and resources required (estimated at as many as 1,000 or more additional staff hours) to adhere to SOX. Large public companies (those with capitalization of $1 billion or more), on the other hand, are reporting having to dedicate between 3-5 percent of revenue to comply SOX – quite a large output but in many ways a drop in the bucket considering their size. " For the complete article, click here.
If your company, large or small, needs help in complying with Section 404, see www.issuescentral.com to review the Compliance Playbook(tm).
