The Government Accountability Office report on Sarbanes-Oxley makes interesting reading.

For a start, the US Government auditors identify the obvious: that the costs of compliance with Section 404 of the Act have been disproportionately higher for smaller companies and higher than anticipated.

But it questions recommendations of the official advisory committee for exemptions from the law for smaller public companies.

First, it slates them for not being specific enough in what needs to be done. How do you fix it so that companies have some guidance on how they go about implementing and reporting?

Secondly, it has issues about the committee recommending exemptions "unless and until" there's a framework that recognises the particular characteristics of smaller companies.

"If resolution of small public company concerns about a framework and its implementation results in an extended period of exemption, then large numbers of public companies would potentially be exempted for additional periods from complying with this important investor protection component of the act," the report says.

That hasn't stopped the conservative Free Enterprise Fund, which has launched a constitutional challenge to the Public Company Accounting Oversight Board , from coming out with a statement claiming that the GAO report vindicates their position.

Watch this space!!