Subject: File No. S7-24-06
From: Karen Kerrigan
Affiliation: President CEO, SBE Council

February 26, 2007

February 26, 2007

Nancy M. Morris
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C 205479-1090
Via electronic transmission

RE: File No. S7-24-06

Dear Ms. Morris,

The Small Business Entrepreneurship Council (SBE Council) appreciates the opportunity to comment on the Security and Exchange Commissions (SECs) recently proposed interpretive guidance for Sarbanes-Oxley (SOX), Section 404 where the effort is aimed toward reducing burden for smaller firms through flexibility. SBE Council thanks the Commission for its work.

Here is a summary of the feedback we have received from small public companies, as well as private companies that have been closed off from the public markets due to SOX costs, with respect to the SECs proposed guidance:

-- The proposed guidance does not offer a clear path that would indicate costs, complexity and burden will be reduced.

-- There are inherent differences between the SECs guidance and the Public Company Accounting Oversight Boards (PCAOBs) proposal to implement a new auditing standard under Section 404 that need to be resolved.

-- The proposed guidance does not offer the type of certainty and comfort level that will alter plans for companies that have decided to go from public to private, those looking to list overseas, or companies that were forced to pull back in their plans to go public as a result of SOX costs. In other words, the regulatory framework -- even with the proposed changes will remain too complex and costly for smaller firms.

-- If the proposed interpretive guidance were adopted by the SEC, there would not be enough time for small public companies to prepare for the current deadline of December
31, 2007. Another extension is warranted and recommended if the SEC is determined to move forward with its guidance proposal.

-- With respect to the interpretive guidance that is proposed, the SEC should test whether the proposal actually results in cost-savings for small public companies before moving forward with full-scale implementation.

-- The SEC should revisit Congresss legislative intention with respect to SOX as the regulations go far beyond what was intended by the legislation.

-- The issue of liability in the Section 404 process has not been addressed, which represents a major impediment to achieving cost-effective audits for smaller firms. What is the scope of the safe harbor provision in the proposed guidance?

SBE Council believes the SEC should grant additional exemptions for non-accelerated filers until these critical issues are resolved. Incidentally, the current exemptions provided to smaller public companies have proven that a permanent exemption can work for these firms. That is, investor confidence has not been negatively affected by such exemptions and SBE Council believes (as the SEC Advisory Committee on Smaller Public Companies had originally proposed in its recommendations) that the SEC should fully consider a permanent exemption for non-accelerated filers.

Thank you for your consideration of our views, and the work of the Commission in addressing the needs and circumstances of smaller public companies with respect to SOX, Section 404 compliance and reporting.

Karen Kerrigan
President CEO

Small Business Entrepreneurship Council
2944 Hunter Mill Road
Suite 204
Oakton, VA 22124

Protecting small business, promoting entrepreneurship