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| Governmental Regulations |
| Sarbanes-Oxley: How smaller businesses are coping |
When SOX legislation was drafted, it was intended to impact only public companies, and other businesses that, for various reasons, are required to register with the SEC. But the effects of the legislation are being felt across a much broader spectrum of businesses, and according to Mark Jensen, a director with Deloitte & Touche, “Unless your are a 100% family-owned business and 100% self-financed, you’re going to be impacted by Sarbanes-Oxley.
Perhaps you’ve been impacted by the shortage of qualified accountants, an increase in the cost of Directors and Officers’ Insurance, or even additional expense of upgrading your software in order to share information with a company that is required to comply with Sarbanes-Oxley. If you haven’t felt the impact yet, you will probably notice it soon.
There is one bright spot on the horizon for smaller businesses. The SEC voted September 21, 2005 to extend the deadline for compliance to those firms with less than $75 million in stock available for investors. These companies will have until early 2008 to comply. This action was prompted by information that indicated small businesses are taking a harder hit from Sarbanes-Oxley.
Experts warn that even with the “breathing room” granted by the SEC, business owners need to take compliance seriously. Smart companies will comply early by keeping 5 important strategies in mind:
- Be mindful of deadlines. Know if and when your company will be required to report on internal controls. See http://www.sec.gov/news/press/2005-134.htm
- Look for an auditor that understands the intricacies of the law. Realize that your smaller company will not be held to the same standards as a large one, and don’t let your auditor suggest otherwise.
- Comply with the inexpensive provisions as soon as possible. Experts suggest that if you need to sell your business, you’ll command a higher price if you’ve already begun to implement SOX rules. Since some of them are inexpensive (adding an independent board member, for example), go ahead and be proactive now.
- Be careful when you purchase new software. These packages are designed for big companies that have complex operations. Don’t purchase an expensive software solution until you’re sure it meets (and doesn’t exceed) your needs.
- Be aware of regulations imposed by your state, or by other businesses that must comply with Sarbanes-Oxley now. Banks and insurance companies have begun include Sarbanes-Oxley provisions in their small print.
In the meantime, if you’ve found it difficult to find a qualified accountant due to the crush of businesses who are seeking for accounting expertise, please call us to see what options we can provide. We have placed dozens of temporary or temp-to-permanent accounting professionals, and we can help your business find the expertise you need too.
Sources:
Feldman, Amy. “Surviving Sarbanes-Oxley.” INC. Magazine. September 2005, 132-138.
Rapoport, Michael. “U.S.” Watchdogs Frustrated by Sarbanes Extension.” Dow Jones Newswire. October 4th 2005. <http://www.corpwatch.org/article.php?id=12677> October 2005.
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