The Securities and Exchange Commission has approved new guidelines that try to balance the need for tighter financial controls with the cost of complying with them, the New York Times reports.
It said the new procedures will make it less costly for smaller companies to assess the state of their internal financial controls.
The new standards call for public companies to focus on the areas most prone to potential fraud, streamlining an auditing process that many have called excessive and burdensome.
While big public companies had previously adhered to more rigorous standards, the unanimous vote by the commission’s five members paves the way for this more relaxed set of guidelines to be imposed on the smaller companies that make up the vast majority of American businesses, those with a market value of less than $75 million.
Small companies will have to adhere to the new guidelines starting on Dec. 15 for the 2007 calendar year. The commission had previously delayed the effective date amid complaints that complying with the rules would be too costly for small companies.
The S.E.C. also introduced six rule proposals yesterday aimed at making it easier for small businesses to raise capital.
Federal regulators have been under pressure from business groups and lawmakers to ease the requirements of the internal controls provision of the Sarbanes-Oxley Act of 2002, which was introduced after the Enron and WorldCom scandals.