SEC Agrees to Compliance Delay While It Conducts Study
The Securities and Exchange Commission has agreed to a one-year extension of small businesses' compliance with 2002 financial regulations - a plan that the agency's chairman announced in December before the House Small Business Committee.
The extension would apply to smaller public companies beginning with fiscal years ending on or after Dec. 15, 2009.
The small business community has long complained that complying with the so-called Section 404 regulations of the Sarbanes-Oxley act was too expensive and burdensome.
"Small businesses are very challenged when it comes to regulatory compliance - it can be expensive and the regulations are often very vaguely worded," said Frank Aiello, a vice president with small business consultancy Creative Solutions. "Complying with regulations for start-ups isn't first and foremost on their minds, but as a company grows its business it helps if those practices are already in place. A delay in doing it could mean a cultural shift or a large cost later on."
The agency also said today that it has begun a cost-benefit study on the impact of Section 404 on small firms.
The SEC's final report also will "inform any decision to improve the efficiency and effectiveness of Section 404 implementation," according to an agency release.
"The study will give us the opportunity to ensure that the investor protections of Section 404 are implemented in the way that Congress intended, and do not impose unnecessary or disproportionate burdens on smaller companies," agency Chairman Christopher Cox said in a statement.
The SEC study will consist of a Web-based survey of companies that are subject to Section 404; and interviews including companies that are just now becoming compliant.
The U.S. Chamber and the Senate Small Business Committee immediately expressed their approval of the move after the announcement.
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