A closely watched advisory panel to the Securities and Exchange Commission approved preliminary recommendations it will submit to the SEC in the spring, including one that would exempt most public companies from certain provisions of Sarbanes-Oxley.
At a Dec.14 meeting, the SEC Advisory Committee on Smaller Public Companies voted to exempt microcap companies—as defined by the committee—from Section 404 of SOX, which requires that companies report on their internal control over financial reporting, and that their outside auditors to attest to the controls’ effectiveness. The internal control provisions of SOX have sparked the most controversy among the issuer and auditor communities, largely because of the because of the costs associated with compliance.
