Friday, April 28, 2006
Former SEC Chair Harvey Pitt comments on how to make SOX 404 work for smaller companies without exempting them.
Perhaps the most controversial topic facing the Securities and Exchange Commission today is the issue of applying the Sarbanes-Oxley Act — and specifically Section 404 of the Act — to smaller companies. The debate has drawn sharp response from several former SEC Chairmen, including William Donaldson, Arthur Levitt, and Richard Breeden. All three have publicly opposed proposals that would exempt smaller companies from rules requiring them to demonstrate effective internal controls over their financial reporting.
In testimony before the Senate Banking Committee earlier this week, SEC Chairman Christopher Cox appeared to walk a middle path in the debate, suggesting that 404 could work for such companies if a more appropriate framework could be developed for smaller companies. That view is not all that different from one recently proposed by another former SEC Chairman, Harvey Pitt, who headed the commission from 2001 to 2003. Now founder and chief executive officer of Kalorama Partners, Pitt talked with CFO.com this week about his perspective on smaller companies and section 404.
posted by Brian Moran @ 9:45 AM