The Securities and Exchange Commission says it hopes to release a rule designed to cut costs of complying with the Sarbanes-Oxley Act without gutting the act altogether, The New York Times reported Wednesday.
The commission published a “concept release” Tuesday outlining several questions as to how the law can be carried out and whether any underlying changes need to be made to it. The SEC also called for comments about the questions contained in the release over the next two months.
The act, which has received widespread criticism within the investment industry and has been blamed for driving some listings overseas, requires public companies to assess their internal financial controls before turning their assessment over to external auditors for further analysis.
The section of the act that is in question, Section 404, has been called overly expensive by some companies.
The SEC recommended in the release that smaller companies remain exempt from Section 404 and a push is underway in Congress to exempt a large majority of companies.
SEC officials have not yet said what the new rule will require, however, they did relate anecdotal complaints from companies that said auditors had done too much work.
But while the section has received much criticism concerning its cost, it has shown evidence of improving financial controls.
Inn the first year of the act’s implementation, roughly one of six companies reported control weaknesses, but that number dropped in the second year to about one in 15.