March 25, 2013
As indicated I am the CFO of SmartPros.Ltd., Commission File # 001-32300. I have read the proposed requirement to have an internal audit function added to our corporate responsibilities. I find this to be another layer of beaucracy in a micro cap company that is unnecessary and burdensome. We generate between $15-$20 million in sales, and have an accounting staff the consists of 6 people including me. We have established a set of internal controls with many checks and balances that includes separation of duties and responsibilites.
In my capacity as CFO I review the work of my staff constantly and do not make any original entries into our books. In addition, the CEO provides a layer of review, including signing of checks, reviewing receivables and payables, among other critical review tasks.
This new proposed requirement would also require additional time to prepare the 10Q report and would only impede the process. We have been public since 2004 and in the 8 years we have not identified any errors that might require financial restatements, nor have our auditors proposed any material adjustments or identified any material weaknesses or significant deficiences in our internal controls.
There are many companies that operate with smaller accounting staffs and this requirement would only place a greater burden on them. I think there has to be some kind of exemption for smaller companies such as there were for SOX implementation as this created an inordinate cost that was later rescinded. If we keep regulating these additional expenses we will discourage companies from going public, reducing the possiblity of creating large successful companies. This does not add to job growth or economic stimulus. We need to encourage more companies to raise capital so that the next IBM or Microsoft can be discovered.
We are spending approximately $200,000 a year as a public company in order to comply with public company reporting and regulatory requirements. We are going to either regulate ourselves into oblivion or see the delisitng of many companies. I am not sure that is what NASDAQ or the SEC really wants to accomplish.
Stanley P. Wirtheim, CPA CFO