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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: shades who wrote (60253)	5/4/2006 4:12:10 AM
From: shades	Read Replies (2) \| Respond to of 110194

House Panel Airs Complaints About Sarbanes-Oxley Rule . By Siobhan Hughes Of DOW JONES NEWSWIRES WASHINGTON (Dow Jones)--House Small Business Committee lawmakers, speaking at a hearing convened to air complaints about a corporate accounting regulation, urged the Securities and Exchange Commission to exempt thousands of companies from the rule. Under the 2002 Sarbanes-Oxley law, public companies are required to assess each year the quality of internal controls over financial reporting, with attestation by outside auditors. The requirement was mandated in the aftermath of the Enron Corp. and WorldCom Inc. scandals, when lapses in internal checks and balances were seen as contributing to massive frauds. An SEC advisory committee has recommended exempting about 70% of companies from the external audit requirement amid concerns about the costs. With the tiniest companies - those with a market capitalization of $75 million or less - coming under the rule starting with fiscal years that end in July 2007, the issue has taken on an urgency. "I strongly support the advisory committee's recommendation to exempt smaller public companies from the extreme compliance costs of the Sarbanes-Oxley Act, and I hope the SEC will proceed accordingly," said Rep. Don Manzullo, R-Ill., the chairman of the committee, in a statement on Wednesday. Rep. Nydia Velazquez, D-N.Y., the top Democrat on the panel, highlighted a letter she and other House Democrats had sent to the SEC urging an exemption. She said the internal-control requirement "poses a great burden" on small companies. Analytical Graphics Inc.'s chief financial officer and the chief executives of German American Bancorp and EntreMed Inc. testified in support of such an exemption, warning that the time and expense of complying were onerous. "Such diversion of resources away from research activities can delay critical product development and has, in turn, a deleterious effect on a company's ability to raise capital," said EntreMed Chief Executive James Burns in a statement. Analytical Graphics CFO William Broderick testified that his company decided against going public after determining that the costs of complying with Sarbanes-Oxley were too high. "We have forgone growth opportunities," Broderick said, explaining that the company faces constraints after using $13 million in cash and taking out bank loans to repay a major investor who had counted on an initial stock sale. Mark Schroeder, the CEO of German American Bancorp, said that without changes, "you will see a flood of public banks, small public banks, choosing to go private." - By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; Siobhan.Hughes@dowjones.com (END) Dow Jones Newswires May 03, 2006 17:41 ET (21:41 GMT) Copyright (c) 2006 Dow Jones & Company, Inc.- - 05 41 PM EDT 05-03-06