SEC rules against SMBs plea to re-evaluate SOX regulations.
Congress passed the Sarbanes-Oxley Act in 2002 to restore confidence after shareholders lost billions of dollars because of accounting fraud at companies such as Enron, WorldCom and Tyco. In reality, SOX was an attempt to legislate quality control regarding how publicly traded companies should be managed on a day-to-day basis. The Securities and Exchange Commission (SEC) requires all firms to document - and an external auditor to confirm - that adequate controls are in place to ensure that financial statements filed with the SEC paint a realistic picture for investors.
From the moment SOX was enacted, there have been heated discussions about providing relief for small to midsize businesses by relaxing requirements or exempting some of the rules. During the last three years, committees were formed, industry opinions were generated, and accounting firms requested a re-evaluation and review of the requirements. Finally, on May 17, SEC Chairman Christopher Cox announced that small companies would not be exempt from a key set of new post-Enron, investor-protection rules.
This was not what many executives and Congress expected to hear. It created a tremor that probably will end with Congress modifying SOX under legislation titled the Complete Act.
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