John Kerry introduced legislation today that would help small public companies with the costs of implementing Sarbanes-Oxley regulations. The Small Business Sarbanes-Oxley Assistance Act of 2006, introduced by Senator Kerry, would authorize the U.S. Small Business Administration to award federal grants to small businesses to help them cope with the cost of complying with Sarbanes-Oxley regulations. It also creates a task force, assembled by the SBA Chief Counsel for Advocacy, and comprising of representatives from the U.S. Securities and Exchange Commission (SEC) and others, to report semi-annually on how to reduce the red tape and financial burden, assisting small public companies complying with Sarbanes-Oxley.
“We passed Sarbanes Oxley to create accountability and transparency in the corporate structure, and it’s helping to battle corporate fraud,” Senator Kerry said. “But too many small companies don’t have the resources or expertise to make the necessary structural changes on their own, and we need to make sure they compete on a level playing field. It’s just not right that their resources are being stretched thinner than those of the corporate giants, just to comply and compete. This bill will help small businesses comply with Sarbanes-Oxley, and offer federal assistance to those who need additional help – so small businesses can abide by the law, create jobs and grow our economy.”
Senator Kerry’s bill follows a recent U.S. Government Accountability Office (GAO) report that found small public companies to be spending considerably more on implementing Sarbanes-Oxley, particularly Section 404 of the bill, which requires firms to establish internal control frameworks and to file internal control reports. The report found that firms with less than $75 million in market capitalization were spending $1.14 in audit fees per $100 of revenue, compared to just $.13 per $100 for firms with greater than $1 billion in market capitalization.
“The task force will make it easier for small businesses to comply with the Sarbanes-Oxley in the future.” Senator Kerry said. “In the meantime, if Congress is asking these small firms to take on the costly burden of complying with Sarbanes-Oxley, the least we can do is chip in and help pay for it.”