Sarbox for SMBs: What's the Holdup?

Lora Bentley

Small business advocates are making still more noise about companies drowning under the weight of Sarbox compliance costs.


As a result, in early August the Securities and Exchange Commission delayed the reporting deadline for companies with less than $75 million in market capitalization until years ending after Dec. 15, 2007. (The previous deadline was years ending after July 15, 2007.)


We know it's not new news, but an article published last week pointed out something we hadn't seriously considered until now: Does the SEC not want to enforce Sarbox requirements against small business?


As a writer from The Street points out, this is the fourth time the commission has granted such an extension, and we won't be surprised if it's not the last.


We understand that compliance can eat up between 1 percent and 3 percent of total revenue for some smaller companies, which is huge, but according to The Street, more than half of 2004's restatements came from companies with less than $250 million in sales, and 39 percent came from those with less than $100 million in sales.


If the smaller companies really are the ones that need controls the most, we don't think it makes much sense to exempt them from Sarbox section 404 or to delay its implementation.

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