Chamber Center for Capital Markets Competitiveness Calls for Additional Changes to Audit Rules

Though Improved, New Rules Remain Too Vague, Costly, and Burdensome

WASHINGTON, D.C.—In a letter to the Securities and Exchange Commission, the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness (CCMC) today urged the agency to issue clearer guidance to businesses on how to comply with revised auditing rules of Sarbanes-Oxley Section 404 (SOX 404), including further defining terminology and providing more examples. In addition, the Chamber reiterated its call for a one-year delay in compliance with SOX 404 for small companies.

"If these issues are not addressed, the cost of capital in the U.S. will continue to rise while it is decreasing elsewhere in the world. As a result, the negative effects currently suffered by public companies will remain, with smaller U.S.-based issuers facing barriers to entering the public market and foreign companies being dissuaded from raising capital in the U.S.," said Michael J. Ryan Jr., senior vice president and executive director of the CCMC.

The Chamber letter which was delivered to the SEC and the Public Company Accounting Oversight Board (PCAOB) contains specific suggestions for clarification of terms used in the current guidance. In addition, the Chamber expressed concerns that smaller businesses continue to face an overly burdensome and costly process which will hamper their ability to compete, grow, and in some cases survive.

"The SEC's and PCAOB's interpretation and enforcement of SOX 404, and new audit standard, will determine whether the appropriate balance is struck between protecting shareholders and providing investors access to investment opportunities in companies conducting their businesses in a competitive and cost-effective way."

In addition to requesting guidance clarification, the Chamber requested the SEC and PCAOB prepare a post-adoption cost benefit analysis of the new guidance and standards so that all parties have a clear understanding of how the rules have been implemented and what impact they have had on businesses, especially smaller businesses.

The U.S. Chamber is the world's largest business federation representing more than 3 million businesses and organizations of every size, sector, and region.

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