SOX Exemption debate

Good grief I hope that SOX exemption bill passes! Having dealt with many low-cap public companies I can tell you that SOX, while seemingly great for investors, actually hurts them at these small companies b/c the companies can't afford to hire the extra staff, internally or externally, to help with SOX compliance. Therefore the same few accounting and finance employees are simply stretched that much further in their daily jobs and other things don't get done. Other critical things, like financial analysis, or process improvements and the like. There are only so many hours in the day, and unless your company can pile on the people and consultants to meet the demands of SOX, you're simply giving up performance elsewhere.

No matter what you call it, SOX is a system of internal controls which when functioning properly give some assurance to the reader of a company's documents that the financial statements and disclosures have been properly prepared. I think you would agree with me that if a company's internal controls did not offer this assurance that there is a risk that the financial statements may be incorrect. current proxy statements require a board of directors to disclose how they manage risk. Therefore, I am of the opinion that if SOX was to be totally eliminated for all size company's there would still have to perform the same function (SOX or whatever you want to call it.)

SOX was, when first launched, laden with awfulness.
However in what is contrary to normal courses of events (perhaps because there simply were not enough auditors?), it has been clarified to the point where it isn't as unproductive as before (in my limited experience with it), and does retain some of its benefits.
Further narrowing does make sense, focusing on areas of real risk. Elimination doesn't, however.

Yes, SOX can be overkill for small companies, but as a consultant who has worked with clients in implementing or refining their SOX Programs, I can say that there are parts of this program that are very, very usefull to most firms. For example, I found in one firm that a woman was approving time sheets for her husband. It was an oversight of which management was not even aware. The processes here force management to pay attention to the processes and the safeguards built into those processes and that is always good. In my view, one of the best, if not the best part of SOX is the requirement for account reconciliations to be performed at the end of each period with complete backup, signed by the preparer and approved by a manager, preferably not the supervisor of the preparer.

I am going to age myself here, but SOX is nothing but good practices that were taught to all accountants prior to computers on every desk. Yes it is expensive for medium and small public companies, but as a consultant that consistently employed because companies don't train or monitor their employees SOX forces them to review their work and hopefully makes the auditors do their job correctly. With the current economic conditions in this country most companies need to have SOX to keep them in line. They are expecting their employees to more with less and they definitely aren't monitoring them, training them or paying them. Sox can prevent some of the problems this created.