Hopes of the Securities and Exchange Commission providing exemptions for small companies from key Section 404 provisions of Sarbanes-Oxley have been dashed.

SEC chairman Christopher Cox has told Congress that there is no need for exemptions - you just need to make Section 404 work for smaller companies.

In this CFO.com report of his testimony to the Senate Banking Committee, Cox has argued there should be no watering down of securities regulation. His comments come after the SEC's advisory committee recommended proposals to exempt. But the chairman played that down, suggesting that his comments were not at odds with the committee.

"My goal as chairman is to find a way to make 404 work. It should not be a question of whether to apply it to companies of all sizes, but how."

"There ought to be a way - and the advisory committee's recommendations contemplate this - there ought to be a way to make this work. There seems to be lacking a framework applicable to smaller companies."

Lobbyists pushing for exemptions would say Cox is Jumping the gun. But whichever way you look at it, it's not a good sign for the smaller companies wanting change. When the chairman of the SEC says it shouldn't happen, it's doesn't leave them much room to move.

Sure there'll be plenty of noise in the lead-up to the joint roundtable discussion with the Public Company Accounting Oversight Board on May 10, but that's just color and movement. The decision seems to have been made.

Based on Cox's comments, we can expect some changes that would try to tailor the legislation to suit smaller companies. Whether that's workable is another question.