I have blogged on how accountants have been the big winners out of Sarbanes-Oxley. It's perverse when you think about their role in the scandals that resulted in the legislation.
Claiming accountants have really cleaned up from SOX, Alex J Pollock from the American Enterprise Institute has come out with the ultimate plan to get even. His proposal is to have accounting firms subject to Section 404 of Sarbanes-Oxley. In other words, expand the Sarbanes-Oxley internal control requirements to cover the beancounters themselves. His other proposals include making compliance with Section 404 voluntary and if not, at least make it voluntary for smaller public companies.
The proposal comes in the wake of the the Securities and Exchange Commission's advisory committee recommending proposals to exempt thousands of small companies from Section 404.
But a report has raised questions whether the proposed exemptions are in the public interest. The report, Bridging the Sarbanes-Oxley Disclosure Control Gap produces alarming statistics that raise questions whether small-cap and micro-cap companies can be relied upon to self-report material weaknesses in internal controls.
Watch this space.
I like the idea having accounting firms be subjected to the same rules. Public Choice economics suggest that their interpetations of SOX will change much at that point.