Friday, May 19, 2006

NY Times: S.E.C. Eases Audit Rules but Rejects Exemptions

Small firms and even academic researchers (see for instance Linck, Netter, and Yang 2005) have noted that the costs of Sarbannes-Oaxley compliance are higher for small companies. In part as a response to the complaints, the SEC tried to make things easier.

From the NY Times:
"The Securities and Exchange Commission moved yesterday to make audit rules that have angered many companies easier and less expensive to apply. But despite political pressure, the commission said smaller companies would eventually have to comply with rules governing their internal controls."

*"...The cost of compliance for smaller companies has been the prime exhibit in political arguments that provisions of the Sarbanes-Oxley Act of 2002 should be scaled back, and a bill to exempt most companies from the rules was introduced in Congress hours before the commission made its announcement."

*"The S.E.C. statement came as the Public Company Accounting Oversight Board announced plans to change the auditing standard involved, with the aim of making the rules clearer and permitting audits to be done more efficiently."

Stay tuned.

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