Editing Sarbanes–Oxley Act (section)

====Sarbanes–Oxley 404 and smaller public companies====
The cost of complying with SOX 404 impacts smaller companies disproportionately, as there is a significant fixed cost involved in completing the assessment. For example, during 2004 U.S. companies with revenues exceeding $5 billion spent 0.06% of revenue on SOX compliance, while companies with less than $100 million in revenue spent 2.55%.<ref>{{cite web|url=https://www.sec.gov/info/smallbus/acspc/acspc-finalreport.pdf|title=Final Report: Advisory Committee on Smaller Public Companies|access-date=August 27, 2010}}</ref>

This disparity is a focal point of 2007 SEC and U.S. Senate action.<ref>{{cite web|url=http://dodd.senate.gov/index.php?q=node/3852|title=Dodd-Shelby Amendment|publisher=Dodd.senate.gov|date=2007-04-25|access-date=August 27, 2010}}</ref> The PCAOB intends to issue further guidance to help companies scale their assessment based on company size and complexity during 2007. The SEC issued their guidance to management in June, 2007.<ref name="autogenerated2007"/>

After the SEC and PCAOB issued their guidance, the SEC required smaller public companies (non-accelerated filers) with fiscal years ending after December 15, 2007 to document a Management Assessment of their Internal Controls over Financial Reporting (ICFR). Outside auditors of non-accelerated filers however opine or test internal controls under PCAOB (Public Company Accounting Oversight Board) Auditing Standards for years ending after December 15, 2008. Another extension was granted by the SEC for the outside auditor assessment until years ending after December 15, 2009. The reason for the timing disparity was to address the House Committee on Small Business concern that the cost of complying with Section 404 of the Sarbanes–Oxley Act of 2002 was still unknown and could therefore be disproportionately high for smaller publicly held companies.<ref>{{cite journal|ssrn=978834|title=Sarbanes–Oxley: Progressive Punishment for Regressive Victimization|volume=44|issue=1|journal=Houston Law Review|pages=95–129|year=2007|url=https://houstonlawreview.org/article/4833-sarbanes-oxley-progressive-punishment-for-regressive-victimization|last1=Rezzy|first1=Oleg}}</ref> On October 2, 2009, the SEC granted another extension for the outside auditor assessment until fiscal years ending after June 15, 2010. The SEC stated in their release that the extension was granted so that the SEC's Office of Economic Analysis could complete a study of whether additional guidance provided to company managers and auditors in 2007 was effective in reducing the costs of compliance. They also stated that there will be no further extensions in the future.<ref>{{cite web|url=https://www.sec.gov/news/press/2009/2009-213.htm|title=SEC Press Release:Final Stage of Section 404 of Sarbanes–Oxley to Begin in June|publisher=Sec.gov|access-date=August 27, 2010}}</ref>

On September 15, 2010 the SEC issued final rule 33–9142 the permanently exempts registrants that are neither accelerated nor large accelerated filers as defined by Rule 12b-2 of the Securities and Exchange Act of 1934 from Section 404(b) internal control audit requirement.<ref>{{cite web|url=https://www.sec.gov/rules/final/2010/33-9142.pdf|title=Internal control over financial reporting in exchange act periodic reports of non-accelerated filers|publisher=SEC.gov|access-date=2010-09-15}}</ref>