In another development for the work in progress known as Sarbanes-Oxley, co-author of the legislation Michael Oxley says regulators have the legal authority to wind the act back to help smaller companies.

This coincides with AMR Research forecasts that compliance spending by US companies will hit $28 billion next year.

It also coincides with restatements hitting record numbers in 2005, double the number in 2004 and three times the amount in 2002. According to that report smaller companies are more likely to restate.

That is the same lot that would be exempted from Section 404 if the changes go through. So the argument goes that changing the rules would not be in investors' interests. Trouble is investors pick up the tab. They pay for those costs. It's a point well made by columnist Chuck Joffe.

That's the challenge for any regulatory regime. The bottom line is what sort of rules are in investors' interests and the problem with Sarbanes-Oxley is getting the right balance between trust and costs. As a work under construction, it has a long way to go.