So change is ahead. The question is whether it will be real change, or just a band-aid.
Michael Oxley, the SOX co-author, has come out saying that he expects some changes next year in the way that Sarbanes-Oxley will be enforced, according to news reports.
Oxley is trying to have it both ways. First he defends the law ("We did a good job, all things considered") but then admits it's having a severe impact on small companies.
But that's what you get when you rush through a law without any Proper cost-benefit analysis which is absolutely necessary when you are introducing changes as sweeping as the ones under Sarbanes-Oxley.
A rigorous cost-benefit analysis would have identified the problems that subsequently emerged.
But how effective will the changes be?
Less than two weeks ago, Securities and Exchange Commission chairman Christopher Cox told a congressional committee that the act's internal controls provisions had been costlier than expected but that there were no irreparable problems.
Contrast that with the about-face by his predecessor Alan Greenspan who says the only way forward is to scrap the whole thing and start again.
Perhaps a sign of what might lie ahead is the move by the Public Company Accounting Oversight Board to simplify Auditing Standard 2 which, if implemented successfully, could simplify and streamline the internal control provisions of Section 404. The regulators would expect this to make Section 404 more cost-efficient for smaller companies by reducing the time and money spent on audits.
The Greenspan solution is unlikely to get up.
no comment untill now