Representative denies Congressional rewrite of SO Act
July 8, 2005
One of the authors of the Sarbanes-Oxley act, which requires companies which trade on public exchanges to show that they have adequate oversight of their accounting practices in order to avoid fraudulent activities, admitted at a conference in London on Thursday that some of the provisions of the act are “excessive”.
US Representative Michael Oxley defended the principle of federal requirements for investor-friendly rules, however. Some have said that such regulation should be left to the states. He said that the act had been rushed through Congress following the accounting scandals that led to the downfall of Enron and WorldCom.
Mr. Oxley allowed that if he had another chance to write the legislation, he would include more flexibility for smaller firms. He also said, however that Congress will not look at the issue again and that while the Securities and Exchange Commission is looking at instituting different rules for smaller companies, their second look will not bring reform of the current rules.
One of the criticisms of Sarbanes-Oxley is the fact that it does not exempt smaller companies from its requirements. The business lobby has been vocal in its belief that compliance with the act costs too much.