Small Firms Get Sarbanes-Oxley Extension

The Securities and Exchange Commission yesterday gave the smallest public companies five more months to comply with financial-control rules under the 2002 Sarbanes-Oxley Act.

It was the fourth such delay granted by the SEC to companies with market value of less than $75 million. The decision came two days after the five-member SEC tentatively adopted a plan to give corporate managers at all public companies more flexibility in assessing the strength of internal financial controls. That change would especially benefit smaller companies.

Sarbanes-Oxley requires companies to assess the strength of their internal safeguards to ensure that their financial statements are accurate. Companies have complained that the rules are burdensome and costly, especially for smaller businesses.

Under the latest extension, the smallest companies will have to report on their controls in annual reports for fiscal years ending on or after Dec. 15, 2007. The previous deadline was for fiscal years ending on or after July 15.

The SEC also gave all companies that have recently become public a transition period before they must comply with the financial-control rules.