The Securities and Exchange Commission plans to delay for another year the requirement that small companies report on the state of their internal financial controls, the agency’s chairman, Christopher Cox, is expected to tell lawmakers on Wednesday.
In testimony prepared for a hearing of the House Small Business Committee, Mr. Cox said that he would propose delaying the rules until 2009 and that the decision on whether to require compliance would then be based in part on a study of costs to be conducted by the commission’s economists.
“More than five years since the Sarbanes-Oxley Act was signed into law, there are roughly 5,000 firms in the smaller public companies category that still aren’t required to provide an auditor’s report on their internal controls, as required by Section 404(b),” Mr. Cox said, according to a copy of his prepared testimony provided by a Congressional staff member.
The exempt companies generally have market capitalizations less than $75 million and represent a small percentage of the total market value of American companies, but they include a majority of all traded companies.
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