Keep up the heat on Sarbox.CHIEF EXECUTIVES of large public companies have dealt with the Sarbanes-Oxley Act See SOX. of 2002 and moved on. But nearly 80 percent of all publicly traded companies publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. , accounting for 6 percent of total U.S. equity market capitalization Equity Market Capitalization A measure of the total market value of an equity market. The measure is calculated by taking the market capitalization of all companies in the equity market and adding them together to arrive at the capitalization for the market as a whole. , are still wrestling with it. A moment of truth is at hand. The Securities and Exchange Commission established an Advisory Committee on Smaller Public Companies to advise it on how to apply Sarbox to these smaller companies. The advisory committee will make a final report to the SEC in late April but has released an early draft. Although generally supportive of easing the pain of Sarbox, the draft report suggests a new test for whether Section 404, which mandates internal controls that can be tested by outside auditors, should be applied. Companies with less than $250 million in sales would get relief, but any company larger than that would not. This is a sticking point sticking point n. A point, issue, or situation that causes or is likely to cause an impasse. Noun 1. sticking point - a point at which an impasse arises in progress toward an agreement or a goal and chief executive should be demanding that all these companies get relief from a hugely expensive, time-consuming process, which ultimately does not guarantee that fraud won't occur. Although Sen. Paul Sarbanes recently denied that Sarbox was enacted in haste, the evidence is overwhelming that the law overshot overshot protruding. overshot fetlock see knuckling over. overshot jaw See brachygnathia. Called also parrot mouth. the mark. The latest evidence is the results of Chief Executive's polling of its readers. More than 90 percent of some 193 respondents said they would prefer to manage their companies as privately held entities, far from the scrutiny of the stock exchanges and SEC. (See Confidence Index, page 22.) Some readers said public companies have to spend 30 to 40 percent more of their time on compliance and financial market requirements than privately held counterparts. Rather than putting up with Sarbox, CEOs of smaller public companies are tempted to go private or stay private. That will bring less transparency to the markets, not more. So keep up the heat on the SEC. And if the Free Enterprise Fund's suit against the Public Company Accounting Oversight Board The Public Company Accounting Oversight Board (or PCAOB) (sometimes called "Peekaboo") is a private-sector, non-profit corporation created by the Sarbanes-Oxley Act, a 2002 United States federal law, to oversee the auditors of public companies. moves forward, there may be even more opportunity for relief from Sarbox. After all, if the PCAOB PCAOB Public Company Accounting Oversight Board is ruled unconstitutional, then the law that created it will have to be revisited. |
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