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Two Sides on Sarbanes

Two Sides on Sarbanes

by Rick Turoczy on July 11, 2006

Congress and the Securities and Exchange Commission are pushing in opposite directions about whether the Sarbanes-Oxley Act should apply to all public companies.

Congress is considering bills in both houses that would exempt “smaller firms”—those with under $700 million market capitalization—from filing reports on internal accounting controls, while the SEC says all public companies will eventually be required to file such reports.

Section 404 of the Public Company Accounting Reform and Investor Protection Act of 2002 (better known as Sarbanes-Oxley or SOX) requires public companies to audit their internal financial control systems and identify any “material weaknesses.” Sarbanes-Oxley, passed in the wake of several high-profile financial scandals, is intended to ensure greater accountability in public companies’ reporting and accounting practices.

Two Sides on Sarbanes

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