Kerry, Snowe Praise Sarbanes-Oxley Extension for Small Businesses
After nearly a year of urging from Senator John Kerry (D-Mass.) and Olympia J. Snowe (R-Maine), today the U.S. Securities and Exchange Commission (SEC) agreed to provide small businesses with an additional one year extension to comply with Sarbanes-Oxley internal control requirements. Earlier this year, Kerry and Snowe held a hearing focusing on the impact of Sarbanes-Oxley regulations on small businesses and wrote three letters to the SEC seeking additional time for small firms to comply while preserving the intent of the 2002 law.
"It took too long and it required too much pressure, but it seems the SEC will finally provide small businesses a little extra time to comply with the Sarbanes-Oxley reforms," said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship. "Senator Snowe and I strongly urged the SEC to take this action because smaller firms face higher costs to comply with Sarbanes-Oxley. This will help ease the burden on small firms and help encourage more small businesses to become public companies - while still ensuring transparency and honest accounting."
"I commend Chairman Cox and the Securities and Exchange Commission for implementing this delay which will give these small firms time to successfully meet Sarbanes-Oxley's requirements and enable the SEC to fully consider the economic impacts on small publicly traded companies," said Senator Snowe, Ranking Member on the Committee on Small Business and Entrepreneurship. "Small public firms believe in strong internal controls and Senator Kerry and I will continue to vigilantly work to assure that Sarbanes-Oxley promotes corporate responsibility without driving small public companies out of the U.S. stock market."
Small firms worth less than $75 million face a higher burden than larger firms in complying with the Sarbanes-Oxley regulations. In 2006, restatements of financial results for large companies decreased by 20 percent, while restatements for the smaller firms increased by 42 percent due to the disproportionately higher cost and time needed to comply.