Why Set Compliance Deadlines if They're Continually Delayed?

Lora Bentley

Well, the Sarbanes-Oxley 404(b) compliance extension the Securities and Exchange Commission proposed in February has been officially approved. The commission approved the delay last week after the Office of Management and Budget gave the SEC the green light to proceed with its study of the cost burden of Sarbox 404(b) compliance on businesses with a market capitalization of less than $75 million.

 

According to CFO.com:

The SEC will now move forward with interviews and a Web-based survey as part of its effort to collect real-world data from a broad array of companies and analyze what drives costs -- particularly for smaller companies -- and where companies and investors derive the benefits from Section 404.

The study's goal is to determine whether new guidelines for internal controls evaluations are doing what they were intended to do.

 

I know I've said it before, but I wholeheartedly agree with Withum Smith+Brown analyst Thomas Basilio when he says the SEC is lulling small companies to sleep with these repeated delays. What's to make them take the Sarbox requirements seriously when the deadlines are pushed back again and again?

 

There comes a time when the studies and the discussions need to stop and a decision needs to be made. And if the government needs more time for research and surveys, why not suspend the requirements for SMBs altogether until it's clear what those requirements should include and how they should be implemented? Don't set a revised compliance deadline at all if there is a probability it will only be delayed again. Doing so only eats away at the SEC's credibility.



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