Regulators to Hear Corporate Complaints

U.S. securities regulators will hear business leaders’ passionately held views this week on how to amend or kill post-Enron requirements that many believe are hurting American competitiveness.

The landmark Sarbanes-Oxley law, approved by Congress in 2002 to restore investor confidence after a string of accounting scandals, has been under attack. A challenge is pending in federal court, and House Republicans are expected to introduce a bill this week that would roll back part of the law.

On Wednesday, the Securities and Exchange Commission and the Public Company Accounting Oversight Board will hear company complaints that the costs of complying with the law far outweigh any benefits.

Last month, an advisory committee urged the SEC to exempt smaller companies from a key portion of the law, Section 404, that requires companies and outside auditors to confirm the effectiveness of internal accounting controls.

Accounting firms, which earn huge audit fees as a result of the requirements, oppose major reforms to the law.

PricewaterhouseCoopers said in a letter to the SEC that it continued to see positive changes in the awareness of the need for internal controls. “We attribute much of these changes to the implementation of the requirements of Section 404.”

Executives from major U.S. accounting firms and corporate giants including General Electric Co., CBS Corp. and Microsoft Corp. are expected to attend the meeting.

Four of the SEC’s five commissioners have said they favor remedies short of the complete 404 exemption for small companies -- about 80% of U.S. public companies -- recommended by the commission’s own advisory panel.

Sen. Paul S. Sarbanes (D-Md.) and Rep. Michael G. Oxley (R-Ohio), who shaped the legislative response to scandals at Enron Corp. and WorldCom Inc., disagree on what should happen next.

Sarbanes said earlier this year that the “law is working as intended,” and Oxley now says he supports “dealing” with the issue, when asked whether he supports 404 exemptions.

Oxley said last week that he believed SEC Chairman Christopher Cox wanted to find a consensus among the commissioners, “and my sense is he is moving in that direction but not necessarily the blanket exemption.”