Easing the Regulatory Burden on Small Business

By Congressman Dennis Moore

In 2002, Congress passed and President Bush signed into law, the Sarbanes-Oxley Act. Enacted in response to serious lapses in corporate governance, Sarbanes-Oxley is one of the most significant and comprehensive securities laws that Congress has passed since the Securities Act of 1933 and the Securities Exchange Act of 1934.

Sarbanes-Oxley created the Public Company Accounting Oversight Board, which is supervised by the Securities and Exchange Commission (SEC). Sarbanes-Oxley   also requires that public companies implement new internal financial control systems, verifiable by public accountants, to prevent accounting and other types of financial fraud (known as "section 404," or the "internal controls" provision).

Compliance with Sarbanes-Oxley's internal controls provision has generated significant concerns within the business community, particularly the small business community. It even has led the SEC to delay implementation of the provision in the past.

The SEC has responded to the small business community's concerns by establishing a small-business advisory board. In May, the SEC announced that it intends to improve the implementation of the internal control requirements of Sarbanes-Oxley, including issuing guidance for small companies and revisions of its internal control-auditing standard.

In June, I joined several of my colleagues in sending a letter to the SEC and the Public Company Accounting Oversight Board offering support for regulatory fixes to section 404 that would reduce the burden on small businesses. These fixes would ensure that small businesses have the tools they need to achieve the investor benefits of strong internal controls without significant and undue burdens. I hope that in the next few months, these two agencies will provide appropriate standards and guidance so that small public companies, which often have limited resources, get some much-needed relief.

The spirit of entrepreneurship has made America the world's leading economic power and, for many, owning a business is part of the American dream. Small businesses also anchor our communities, provide local residents with jobs and bring economic development to underserved areas.

Unfortunately, too many small businesses still face an array of challenges today. As a member of the House Committee on Financial Services, I will continue my efforts to ease the regulatory burdens on small businesses, so that they can continue their important contribution to our nation's economy.

Rep. Dennis Moore represents Kansas' Third U.S. Congressional District, which includes Johnson, Wyandotte and Douglas counties. For more information about small business issues, please visit his website at www.moore.house.gov.