Determined to cut costs of Sarbanes-Oxley without actually transforming it, the Securities and Exchange Commission has come out with its promised review.

And it's being politically smart by asking investors and companies for ideas on how to do it.

As John Dewey once said, the public is like a piano. You have to know what keys to poke. Or as CFO.com put it, the exercise provides more questions than answers.

And some things, like Section 404, remain non-negotiable.

"Our goal is to develop practical guidance for companies to help improve the reliability of financial reporting and to make Section 404 implementation more efficient and cost effective for investors," said SEC Chairman Christopher Cox in the SEC statement.

More details are spelled out in the SEC's concept release.

Sure, companies are struggling with Section 404. But according to the concept release, they simply haven't been doing it right.

"Feedback that the Commission has received indicates that, in implementing the requirements of Section 404, many companies did not efficiently and effectively identify risks to reliable financial reporting and relevant internal control functions, ultimately leading to the identification, documentation, and testing of an excessive number of controls. We are also skeptical of the large number of internal controls that some companies have identified, documented and tested."

As expected, the SEC move has been slated on Professor Stephen Bainbridge's blog.

"In sum, a couple of extra months before full compliance is required, a tweak to auditing standards that might reduce costs in one area, and unknown guidance to be provided in an unknown form.
"Unlike the recommendations made by its own Advisory Committee, which would have provided significant and comprehensive regulatory relief for smaller public corporations, the SEC has taken a narrow and trivial approach to the problem. It's like using a band-aid to fix a gaping puncture wound."