Washington Times on SOX

An editorial in today’s Washington Times discusses the negative effects of the Sarbanes-Oxley regulations on small businesses. The one-size-fits-all approach of Section 404, which mandates an annual internal audit in addition to the already required external audit, makes the cost of compliance disproportionately high for many small cap companies. While the SEC has long acknowledged the strain 404 puts on these firms, it has not implemented any provisions to ease it. This has proven to been ample reason for many small firms to go private or sell out to larger companies.