WASHINGTON -- U.S. small businesses will no longer get a reprieve from complying with an auditing provision of the Sarbanes Oxley corporate reform law, the Securities and Exchange Commission said on Friday.
After delaying compliance at least four times, the SEC will now require small companies to report on the effectiveness of their internal controls as of June 15, 2010.
The Sarbanes Oxley law was passed in 2002 after a wave of accounting scandals shattered investor confidence in U.S. capital markets. The law created an accounting watchdog to police auditors of public companies and established accountability rules for corporate executives.
Smaller companies, or those with a market capitalization below $75 million, had previously not had to fully comply with the financial controls section known as "section 404," arguing that they faced disproportionately higher costs compared with larger firms.
"Since there will be no further commission extensions, it is important for all public companies and their auditors to act with deliberate speed to move toward full Section 404 compliance," SEC Chairman Mary Schapiro said in a statement.
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