A group of US congressmen reintroduce a bill designed to protect entrepreneurs from Sarbanes-Oxley, whilst a barrage of complaining letters from US CFOs accuse the SEC and its love-child, the PCAOB, as being out of step on accounting standards.
Three US congressmen, Democrat Gregory Meeks and Republicans Tom Feeney and Pete Sessions are reintroducing their mouthful of a bill, the Competitive and Open Markets that Protect and Enhance the Treatment of Entrepreneurs Act, (COMPETE) which is intended to "reduce some of the financial burdens that have been put on small- to mid-cap businesses as a part of attesting to the soundness of their internal-control functions".
Last year this bill did not get past the committee stage. That version gave companies, with market capitalisation of less than $700 million, the right to skip the Section 404 assessment requirements, including auditor sign-off, for costly and time-consuming internal controls over financial reporting.
Other have joined this battle – New York Mayor Michael Bloomberg and Democratic senator Chuck Schumer commissioned a report suggesting that Wall Street could lose its position as the world's premier market to raise capital to rivals such as London and Hong Kong. Secretary to the US Treasury, Hank Paulson, an ex-Wall Street banker, has also criticised the severity of Sarbanes-Oxley, and two US senators, Olympia Snowe and John Kerry have sent a letter to the SEC and to the PCAOB, asking them to further delay the deadline for the smallest public companies to comply with Sarbanes-Oxley.
On the accounting front, CFOs at a number of large US firms have criticised the failure in coordination between the SEC and the PCAOB over the latest proposed changes. Both have released changes for comment on accounting formats and the need for a risk-based approach to sign-off, which companies such as Pfizer, Southern and Proctor & Gamble believe are ill coordinated, conflicting and unaligned. The result, these firms believe, will have no impact in that auditors will continue to apply the current detailed investigations to all areas.
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