FOR IMMEDIATE RELEASE
ICBA Calls for Further Postponement of Sarbanes-Oxley Requirements for Small SEC Filers
Small Companies Bear Disproportionate Compliance Costs
Washington, D.C. (Dec. 12, 2007)—The Independent Community Bankers of America (ICBA) today citing new evidence from the U.S. Chamber of Commerce of the disproportionate burden of Sarbanes-Oxley (SOX) on small business, called on Congress to postpone the implementation of SOX Section 404(b) for small Securities and Exchange Commission (SEC) filers for one year.
"The new evidence from the U.S. Chamber of Commerce should be a wake up call to the SEC concerning the excessive and disproportionate burden that community banks and other small companies are experiencing with SOX 404," said William (Bill) A. Loving, Jr., executive vice president and CEO, Pendleton Community Bank, Franklin, W.Va., testifying on behalf of ICBA to the House Committee on Small Business. "A one-year delay in Section 404(b) implementation for the non-accelerated filers would allow many community banks more time to prepare for their internal control audit and would give the SEC and the PCAOB (Public Company Accounting Oversight Board) more time to evaluate the effectiveness of their recent Section 404 guidance."
ICBA also expressed strong support for the Community Banks Serving their Communities First Act of 2007 (HR 1869). Introduced by Chairwoman Nydia Velazquez (D-N.Y.), the Communities First Act (CFA) would exempt community banks with assets of less than $1 billion from SOX Section 404 requirements and would raise the threshold for registration under the Securities Exchange Act of 1934 from 500 to 1,000 shareholders, exempting more community banks from the regulatory burdens of both SOX and the Exchange Act.
ICBA also made the following key points in its testimony:
- In a new survey by the Chamber of Commerce, respondents indicated that their 2007 and 2008 SOX 404 costs will exceed $200,000 per year. This confirms the results of a 2005 ICBA SOX 404 Survey of Community Banks and reflects the excessive and disproportionate burden on community banks.
- ICBA applauded Chairwoman Velazquez's efforts to obtain hard dollar estimates of SOX 404's impact on smaller public companies. The SEC should have made those estimates prior to adopting Auditing Standard No.5 or AS-5, the new auditing standard for Section 404 audits.
- The SEC should conduct a comprehensive data collection program for non-accelerated filers beginning this year and should establish quantitative benchmarks for AS-5 tied to a reduction in overall SOX 404 audit costs.
To read the full testimony, visit www.icba.org.