SEC Votes to Ease Sarbanes-Oxley Rules
Thursday, April 5, 2007
The Securities and Exchange Commission yesterday approved a framework for changes to rules under the Sarbanes-Oxley anti-fraud law that would ease requirements for companies and the auditors who pore over their books.
The vote by the five SEC commissioners was unanimous in support of building more leeway into the rules, especially those being written by the independent board that oversees the accounting industry. The commissioners debated the changes, proposed by the SEC staff, at a public meeting at which differences were aired over a crucial part of the Sarbanes-Oxley Act. The law, enacted in 2002 in response to a number of corporate and accounting scandals, requires companies to assess the strength of their internal checks and balances to guard against fraud.
The proposed changes are intended "to eliminate waste and duplication," the SEC said. "These needed improvements in the Sarbanes-Oxley process are especially urgent for smaller companies," SEC Chairman Christopher Cox said.
The framework calls for greater use of an approach based on principles rather than ironclad rules, which is in line with a recommendation of a private-sector group that has been pushing for eased business regulations.
The SEC and the Public Company Accounting Oversight Board have worked for several months to resolve differences over the rules. Some experts and investor advocates complain that the SEC is strong-arming the board to weaken regulatory standards.
Officials of the SEC and the accounting board say they are striking a balance between protecting investors and reducing the financial record-keeping required of companies. The SEC and the oversight board want final rules in place by June so they would apply to audits of all 2007 statements.