Small Firms Could Get More Time for Sarbanes

The Securities and Exchange Commission, responding to complaints that the Sarbanes-Oxley Act puts too big a burden on small companies, said the deadline for them to comply should be put off until the end of next year.

The SEC on Wednesday proposed delaying by six months the July 15, 2007, date for small companies to start reporting on whether their financial controls promote accurate numbers and prevent fraud. The companies also could wait until the end of 2008 to have outside auditors test and certify their controls.

Executives at small companies have said such audits -- designed with scandals at WorldCom Inc. and Enron Corp. in mind -- are so expensive that they wipe out much or all of their profit, and some have gone private to escape the burden. Foreign companies have also objected to the U.S. law.

The changes “continue the commission’s efforts to be sensitive and responsive to the particular needs of smaller public companies and foreign private issuers,” SEC Chairman Christopher Cox said in a statement. Filers with a market value of less than $75 million count as small companies.