Sarbanes-Oxley Extension Good for Small Businesses (Sen. John Kerry)
June 23rd, 2008
The SEC made the right call by providing small businesses with some additional time to comply with Sarbanes-Oxley reporting requirements.
As Chairman of the Committee on Small Business and Entrepreneurship, I’ve met with small business after small business on this issue – and Olympia Snowe and I have advocated for over a year to make sure that small businesses have adequate time to comply with these regulations.
Just a few years ago, the trust and confidence of the American people in their financial markets was hollowed out by a series of corporate accounting scandals. You hear the word Enron and you remember the horror stories of greed and corporate abuse. Innocent people lost jobs, lost savings, and lost their pensions as a result. We passed the Sarbanes-Oxley Act of 2002 to restore confidence in our capital markets and increase corporate accountability.
The good news is, it’s working to keep the big companies on the straight and narrow — most large companies are effectively dealing with Sarbanes-Oxley’s changes.
But, for small businesses, the transition hasn’t been easy – too many small public companies – the kind that can’t hire an army of accountants — continue to have difficulties in complying with its auditing standards. In 2006, restatements of financial results for large companies decreased by 20 percent, while restatements for the smaller firms increased by 42 percent due to the disproportionately higher cost and time needed to comply. While recent regulatory changes have been helpful, small businesses need some additional time to comply with Sarbanes-Oxley.
We know the importance of small public companies in U.S capital markets – not to mention their critical contributions to future economic growth and high-wage job creation. Ultimately, our sensitivity to the needs and concerns of small public companies will help create jobs, expand our economy, and enable dynamic private firms to grow into thriving, innovative public companies.
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