The problems of Sarbanes-Oxley (SOX) continue for both overseas filers and small US publicly quoted companies with recent events doing little to raise the gloom. Overseas filers are non-US companies with share quotations on US exchanges and so have to file accounts in the US. That brings them into the compass of SOX, its auditor requirements and the need for controls on any item of data that may impact the accounts, the Section 404 requirements.
In a recent survey run by Operational Risk and Compliance Magazine, only 42% of European overseas filers said they were ready for their SOX implementation. The number of new overseas companies listing on US exchanges has dried up and Cable & Wireless, the UK telecomm group, announced last week that it was delisting in the US, a difficult task but one that C&W appear to have solved, albeit by forcing Americans to sell their shares.
90% of US companies surveyed believed they were compliant with SOX, but 80% of companies thought that the act a knee-jerk reaction, and was unwieldy, expensive, and hindered business.’ Only 20% thought SOX was a good piece of lawmaking.
Small businesses have petitioned the US regulators for concessions in Section 404 but with little success. In their support, on Wednesday, a group of mainly Republican U.S. Senators and Representatives introduced a new bill, the "Competitive and Open Markets that Protect and Enhance the Treatment of Entrepreneurs" or "COMPETE Act" that would allow SOX to exempt small companies from having to comply with Section 404.
Later on Wednesday, the SEC surprised everyone by turning down its own committee’s recommendations with the statement that all companies, large and small, would have to comply with Section 404.
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