Congress Considers SOX Internal Controls ChangesBy
Rep. Bill Huizenga (R.-Mich.), chairman of the House Capital Markets, Securities, and Investments subcommittee, says the time is ripe for a review of the Sarbanes-Oxley Act of 2002 (SOX).
Congress previously made some changes to that law with the 2012 Jumpstart Our Business Startups (JOBS) Act, which created a class of companies called emerging growth companies (EGC) and also relaxed some provisions of SOX for them. But it looks like more wholesale changes are in the wind. At a July hearing, Tom Farley, president of the New York Stock Exchange (NYSE), offered up the law’s internal controls requirements for reform.
Farley explained compliance with SOX Section 404 can cost a company millions of dollars in outside consultant, legal, and auditing fees in addition to other internal costs. He argued that the provision that requires auditors to attest to a company’s internal controls could “scare off a private company from going public.” He also advocated “narrowing” the definition of internal controls in the law or, at minimum, ensuring that the Public Company Accounting Oversight Board (PCAOB) isn’t expanding that definition.