Small Companies on SOX: What--Me Worry?

After a seemingly endless series of postponements in deadlines designed to help smaller public companies prepare for Sarbanes-Oxley Section 404(a) compliance, a new study of 3,321 smaller companies finds little evidence that they are any better prepared now than when the delays first began. More than a third of the companies reviewed by SOX research and compliance firm Lord & Benoit, gave little or no consideration to the delays and completed assessments at the last minute--or not at all.

More disturbing is smaller companies' attitude. "About 700 companies were completely noncompliant or they issued statements with poor segregation of duties," says Robert Benoit, Lord & Benoit president, noting that segregation of duties is not a control problem but, rather, a way to forestall financial reporting abuses. Even with just two people in a company, accounting and check signing duties can be divided. "These companies just decided they weren't going to do it," Benoit says.


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