Growth Strategies

SEC’s Campos: One More 404 Delay for Small Biz

The SEC commissioner hints at another one-year extension before small companies must comply with 404. Separately, small firms say they expect conti...
Stephen TaubDecember 5, 2006

Small companies won yet another reprieve from having to comply with the most controversial provision of the Sarbanes-Oxley Act.

Securities and Exchange Commission Commissioner Roel Campos said Monday that the regulator will recommend at its Dec. 13 meeting that the deadline for small companies assessing their internal controls be pushed back for a fifth time, Bloomberg reported.

“It makes sense for the smallest companies to have another year,” Campos said, according to the wire service.

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He added that the companies with market value of less than $75 million will have “all the benefits of having the new guidance put in place first,” according to the report.

The more time the SEC gives small companies, however, the happier they will be.

According to a recent survey by Merrill Lynch, over 80 percent of smaller firms said they expect Sarbox-related costs to range between flat and increasing over the next 12-months.

The investment bank said 16 percent of firms said they anticipate Sarbox-related costs to increase next year— the highest reading since its survey’s inception in March 2005.

In fact, the percentage of firms anticipating increases has risen since the past quarter. Merrill reported that 35 percent now expect increases while only 19 percent predict lower costs.

In addition, about 11 percent of the survey’s respondents expect Sarbox-related cost increases to exceed 25 percent over the next year.

Merrill also points out that those firms that anticipate costs declining by more than 25 percent have fallen to 2 percent, which is the lowest it has seen since it started its series of surveys.

Perhaps most critically, however, the survey found that nearly half of the firms (46 percent) still say that Sarbox costs will remain the same; neither increasing nor decreasing from the current high levels.

The survey is based on the responses of 227 Micro and Small Cap firms in the US. The respondents were among the roughly 3,000 firms in the MLSCR Micro and Small Cap composites that were invited to participate.

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