Nearly five years after Sarbanes-Oxley was brought in, US regulators are still trying to sort out how much testing accountants will have to do in corporate audits.

The Securities and Exchange Commission and the public company Accounting Oversight Board are grappling with the problem of how to interpret the Sarbox rules which require auditors to evaluate whether companies have adequate procedures and systems in place to prevent accounting errors and shenanigans.

SEC Chairman Christopher Cox has written to the PCAOB urging it to revise its rules for outside accountants under the requirement to adapt them to the size of the company whose books are being audited. That's size alone, rather than both size and complexity which would allow more flexibility in determining how much to test the company's internal controls.

Critics, like former SEC chief accountant Lynn Turner, claim this will hurt investors with others saying the SEC is now brown nosing Wall Street and trying to out-muscle the independent oversight board.

"This is just the SEC pandering to business interests by rolling back a regulation that has proven to be effective," said Barbara Roper, director of investor protection at Consumer Federation of America.

Significantly, there will be a public meeting Wednesday to discuss the issues. SEC chairman Christopher Cox reckons the meeting will help the two agencies meet their goal of adopting final rules by May but read between the lines: holding a public meeting shows how divided the regulators are. If everything was peachy, it would have been easier to sort it out behind closed doors.

In a similar vein, the SEC has been accused of being heavy handed with the Financial Accounting Standards Board.

It held up approval of FASB's budget for four-and-a-half months until the standard-setters agreed to give the regulator more say over the appointment of FASB members, reports CFO.com.