Required: After reading the Bye, Bye SOX? Article comment on the issue of small business compliance with Section 404 of SOX

Bye, Bye, SOX?
The Sarbanes-Oxley Act (SOX)	SOX compliance has been extended
may be declawed by upcoming	four times, but they wont need to
U.S. Congress and	comply at all if the Garrett-Adler
Supreme Court decisions.	amendment makes it to the Senate
The House of Representatives	floor as a standalone bill.
recently voted to approve the	SOX also established the
Garrett-Adler amendment, which	PCAOB to oversee and regulate
would exempt small companies	audit firms. PCAOB operates under
from SOX Section 404 provisions,	the supervision of the Securities
while the Supreme Court is considering	and Exchange Commission (SEC),
the constitutionality of the	which also appoints PCAOB members.
Public Company Accounting Oversight	It is funded by fees charged to
Board (PCAOB).	audited firms. When it was established,
These developments may have	Congress wanted the board
long-term implications for SOX, the	to be separate, with its own funding
2002 legislation passed in the wake	stream, and outside normal civil
of the Enron, WorldCom, and Tyco	service laws so it could attract
scandals. The outcomes may also	highly qualified specialists. PCAOB
have implications for records managers,	members salaries are more than
information technology specialists,	$500,000 and are reviewed by the
and compliance officers	SEC.
who devise and implement company	Pro-business advocates, represented
controls.	by the Free Enterprise
Section 404 of SOX requires	Fund, argue that the PCAOBs governance
company auditors to attest to the	structure is unconstitutional
soundness of the firms internal	because it is an independent
controls and financial statements.	agency that does not allow for the
Internal controls may include anything	president to appoint members. Additionally,
from transaction approval authorizations	because only the president
to records retention	can remove SEC commissioners
programs. This provision is widely	for cause, and because
blamed for an increase in auditors	the SEC can only remove PCAOB
fees, as well as increased expenditures	members for cause, some court
to ensure that proper internal	members believe this is a formerly
controls are in place.	unrecognized limit of the presidents
Small firms those with	powers that may contradict
less than $75 million in	the constitution.
market capitalization	The Supreme Court will take up
have protested that	the issue soon, and some legal experts
compliance with SOX 404 would	believe that SOX could be
cost them a disproportionate share	abolished completely if the court
of their earnings. The complaint is	rules the PCAOB unconstitutional.
supported by an independent study
conducted at Pennsylvania State
University, which showed that
firms just over the $75 million
mark paid nearly $700,000 more in
audit fees and had average earnings
of negative $1.4 million in 2004