The U.S. Securities and Exchange Commission may ease the burden of the Sarbanes-Oxley Act on public companies, but SEC Chairman Christopher Cox has said he will not excuse any companies from complying – despite outcries that small companies should be spared – a former SEC adviser said Wed nesday in Denver.
“The SEC is trying to make Sarbanes-Oxley more common- sense without having to go back to Congress,” said Leroy Dennis, an accounting expert based in Minnesota who served on an SEC-created committee that examined its impact on small public companies.
The act sought to tighten accounting procedures and board oversight for public firms.
Dennis, speaking during a seminar, said the SEC is trying to balance corporate oversight while allowing the nation’s companies and capital markets to remain competitive.
Possible changes he outlined include offering fresh guidelines this month for corporate managers; extending the compliance deadline for the smallest companies; and revamping liability issues related to shareholder lawsuits.
But the commission is not going to exempt companies from complying with the controversial act, said Dennis, who outlined the latest legislative initiatives affecting Sarbanes-Oxley – also called SOX – during a seminar titled “Governance Update: SOX Compliance … and What’s Next With the SEC.”
The event at the Wyndham Hotel in the Denver Tech Center attracted officials from about 10 public companies in the Denver area. It was hosted by Bloomington, Minn.-based accounting firm RSM McGladrey, which employs Dennis.
Sarbanes-Oxley, passed in 2002, came in the wake of the Enron and WorldCom scandals. Critics say it is time-consuming and costly, especially for small companies.
The SEC has recently said it is considering easing requirements mandated under Section 404, which requires companies to document and test their internal controls and have them checked by independent auditors.
Eric Moore, an executive with Greenwood Village-based Quovadx Inc., said the information gleaned during the seminar will help his software company better work with its auditor.
“You’d rather prevent a fire than have to put one out,” he said.
In addition to SOX-related issues, Dennis said the SEC is more aggressively investigating the backdating of stock options.
He said the SEC is conducting more than 100 investigations related to stock options, many focused on backdating – or changing the date when an option is issued to a senior executive to maximize possible appreciation.
The scandal has embroiled dozens of U.S. companies, including Denver-based Delta Petroleum.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
