Manzullo Backs Small Biz Exemption from Sarbanes Corporate Governance

WASHINGTON – House Small Business Committee Chairman Don Manzullo (R-Ill.) said small businesses should be exempt from certain Sarbanes-Oxley corporate governance provisions. Manzullo, who chaired a full committee hearing on the issue May 3, urged the SEC to heed a recent report from its Advisory Committee to Smaller Public Companies and provide waivers to smaller public companies that can not afford the huge auditing and accounting costs of complying with Section 404 of the Sarbanes-Oxley Act. The Advisory Committee report, released in late April, recommends that certain public companies with market values under $128 million should be exempt from Section 404 until appropriate auditing standards are established for these companies, Manzullo said. Shortly after Sarbanes-Oxley was enacted in 2002, SEC estimated compliance costs for Section 404 at about $90,000 annually. In reality, costs have surged to more than $1 million annually on average, Manzullo pointed out. Smaller public companies with market values under $75 million have until July of 2007, to comply with Section 404, under current SEC rules.