California Republican Representative Ed Royce recently introduced legislation that would exempt small businesses from Section 404(b) of the Sarbanes-Oxley Act.
As the American Institute of CPAs explains, Section 404(b) requires auditors for publicly-held companies to attest to and report on internal controls assessments, including audit solutions and reporting.
However, for many small businesses, the requirement has proven to be more of an annoyance than a benefit.
"Regulatory compliance has inundated many American businesses," Royce said in a statement. "Providing some relief to smaller institutions from Section 404 of Sarbanes-Oxley will make it easier for businesses to access our capital markets which will help bring more jobs to our country."
Under the legislation, companies with a market capitalization of less than $1 billion would be exempted from having to comply with Section 404(b).
A 2009 study by the U.S. Securities and Exchange Commission found companies are spending $2.3 million per year to follow Section 404(b) – a price many smaller businesses struggle to afford. Protiviti's 2011 Sarbanes-Oxley Compliance Survey, released earlier this year, found most organizations spend between $100,000 and $1 million annually on compliance-related activities.