Dodd Bill Does Not Include Sarbanes 404(b) Relief

The other day I did confirm that, unfortunately, the financial industry reform package put forth by the US Senate does not include a permanent exemption for smaller reporting companies from Sarbanes-Oxley Section 404(b). SOX 404(b) would obligate these companies’ auditors to attest to the adequacy of the company’s internal financial controls. Most of us see 404(b) as the most costly burden of SOX.

The House version of bill which came out of Barney Frank’s committee, and which passed the full House, did have a permanent exemption for smaller reporting companies.

The Senate has not yet voted on the measure but is expected to do so soon after the Easter recess. At that point the two houses would try to bridge their differences. We’ll try our best to keep an eye on where this relief stands. If the Frank version goes through, it could be a huge relief for smaller public companies who are already burdened by SOX at a much higher rate, as a percentage of revenue, than larger companies.

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