Subject: File No. S7-06-03
From: John Kuehn
Affiliation: University of Wisconsin La Crosse, 2009 Accounting Graduate

March 5, 2008

The Honorable Christopher Cox, Chairman
U.S. Securities and Exchange Commission
Attn: Nancy M. Morris, Secretary
100 F Street, NE Washington, D.C. 20549
Re: File No. S7-06-03

Dear Chairman Cox:
I think the proposed delay for non-accelerated filers allows companies that the SEC classifies as small to continue with outdated reporting practices that have proven to produce fraudulent and deceptive financial reports time after time in the past. These small companies have claimed that the costs to implement the necessary controls that Sarbanes-Oxley Act of 2002 requires are simply too high. Lord Benoit LLC has done extensive research on 29 smaller public companies in twelve industries and observed nearly 5,500 audit fee reports. The study showed that the first year cost of implementing the necessary controls costs was on average $78,474. This is a 13.8% difference than the amount the SEC has estimated. Companies have begun to feel comfortable using cost as a way to avoid complying and it needs to stop.

Regardless of the cost for implementing these controls, the benefits are reaped by the company itself, stockholders, and potential investors. By complying with these controls the company can only improve their financial reporting standards that will inevitably be required to be met in the future. The stockholders of the company are the most important group concerned with the new proposal. Despite the market cap of a company, when an investor invests in any company they need to be reassured of their investment. When a company receives an investment from one of their stockholders, they owe them the reassurance that financial reporting and other business practices involved are being done correctly and ethically.

There are several public companies on the Russell 2000 that fall under the 75M market cap, making them eligible for the extension in reporting requirements. Chesapeake Corp., a publically traded company on the Russell 2000, has a market cap of 74.47M and employees over 5,500 people in various places throughout the world. This does not seem to be a small company by any means. On a yearly basis Chesapeake Corp. has a gross profit of 175.30M. Given this amount of money, implementing a set of controls would not only protect the corporation from being exposed to unfavorable disclosers that may arise, but also protect the money of its investors worldwide.

The SEC needs to put their foot down and require these companies to report on time and to the required standards as all other publically traded companies. Many non-accelerated filers have sufficient funds to implement these controls and the SEC has encouraged resistance to SOX through the proposed amendment. The original implementation of SOX was to protect the public interest and by allowing a delay, they have delayed the protection of many investors in a large number of companies. Daniel L. Goelzer, a PCAOB Board Member, closed his speech at the 21st Annual Washington Economic Policy Conference by saying, The objective of the Sarbanes-Oxley Act is to restore confidence in financial reporting. Without the investing publics confidence, our securities markets -- the engine of our national prosperity -- would cease to operate.


John Kuehn
2009 Accounting Graduate
University of Wisconsin La Crosse