SEC Meets To Debate Accounting Provision

The Securities and Exchange Commission will meet today to consider easing the most contentious part of the Sarbanes-Oxley Act, which imposed new duties on corporate executives and accountants after a series of fraud-ridden business collapses in 2002.
For five years, industry groups have complained that the law is too complex and burdensome, homing in on a provision that requires companies to assess the strength of their financial controls designed to prevent fraud and mistakes. In recent months, President Bush, Treasury Secretary Henry M. Paulson Jr. and members of Congress have called for an overhaul that would make that provision, known as Section 404, less expensive for small and mid-size businesses.
But striking an appropriate balance between reducing the costs of regulation and preserving the safeguards for investors remains tricky. The SEC's five commissioners are wrestling with how far to scale back the financial-control rule at the same time consumer advocates and a few vocal former agency officials are complaining that regulators are favoring business at the expense of average investors.