March 21, 2006
I wholeheartedly believe that the proposal is a step in the right direction to make SOX 404 a more practical and realistic requirement, especially for small business. I also encourage that further steps be taken and consideration made to increase the definition for microcap and small cap companies. As a small business CFO, I believe that the burden of SOX 404 is much more onerous on companies such as mine and believe that the current trend of numerous smaller companies going private is a reflection of the high public company compliance costs. Also, I believe that such costs will significantly reduce the number of companies that go public and thus decrease the funding of new business in our country.
Besides the burden requirements on small companies, I believe that the assessment requirements for SOX 404 are not needed to the extent they are for larger companies. The ability for management to "control" its financial reporting and other aspects of its business, is much simpler for smaller companies just because of the nature of its operations. The formalization and documentation of controls to the extent currently required is overkill and not a practical or cost beneficial requirement.