| McGladrey
& Pullen leader testifies before SEC advisory committee
William
Travis outlines six-point plan to help smaller public companies
(CHICAGO, ILL., Aug. 10, 2005) – In testimony
on Monday, August 9, 2005, McGladrey & Pullen LLP Managing Partner
William D. Travis told a Securities and Exchange Commission (SEC)
committee that the enactment of the Sarbanes-Oxley (SOX) Act has
enhanced the quality and transparency of financial reporting but
has taken a toll on many smaller public companies.
The SEC Advisory Committee on Smaller Public Companies
is examining the impact of SOX and other federal securities laws
on smaller companies. The committee is expected to present its final
report to the Commission in April 2006.
While acknowledging that SOX has resulted in many
positive changes that have enhanced investor confidence, Travis
said the detailed requirements and costs of SOX has had a deleterious
impact on smaller public companies.
“Many smaller companies have been unable to
raise capital through the IPO process, leaving them strapped with
the costs of being a public company but receiving few of the benefits,
and SOX will only add to that problem,” said Travis.
Travis presented a six-point plan to help smaller
public companies adversely impacted by SOX. The plan recommends
the SEC:
- Conduct research to understand what information investors in
small public companies really want and need.
- Raise the definition of a smaller public company from market
capitalization of $75 million to $700 million and further separate
small public companies into micro caps and mid caps.
- Simplify internal control requirements including adoption of
a more risk-based approach that allows procedures to be spread
over multiple years.
- Extend Section 404 compliance date for non-accelerated filers.
- Extend the implementation of the accelerated filing deadlines
for quarterly and annual reports.
- Provide thorough guidance regarding expectations and requirements
of smaller public companies and their auditors.
As an auditor of more than 100 public companies, Travis said small
and midsized businesses represent a significant part of the U.S.
economy and can’t afford to be “orphaned” by a
law that works for large public companies but is excessively costly
for smaller ones.
About McGladrey & Pullen LLP
McGladrey & Pullen, a partner-owned CPA firm, provides audit
and attest services to midsized companies. It has 100 offices in
the United States. McGladrey & Pullen helps clients with global
business needs through its membership in RSM International (an affiliation
of separate and independent accounting and consulting firms).
McGladrey & Pullen LLP and RSM McGladrey Inc., a business services
provider, have an alternative practice structure. Though separate
and independent legal entities, they can work together to serve
clients’ business needs. When considered together, the two
companies rank as the fifth-largest provider of accounting, tax
and business consulting in the United States (source: Public Accounting
Report).
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