Cox Goes for Moderation in IC Audit Standards

Apparently inspired by the moderate-oriented election results last Tuesday, SEC Chairman Christopher Cox says that a new audit standard to support internal control requirements of Sarbanes-Oxley for smaller public companies will be issued soon and that he is seeking a "happy medium." The new standard is likely to emphasize areas of greatest risk and the $75 million capitalization appears to be a threshold. Cox also indicated that smaller companies would have to self-evaluate internal controls, but would not be REQUIRED to have them audited for the two years preceding full implementation of the new standard.

Chairman Cox should indeed be happy if he can find middle-ground that will satisfy the large majority of stakeholders in the internal control area. Whether the approach to be proposed next spring will lead to contentment remains to be seen; also, newly empowered Democrats may have their own input to add on small company implementation of the Sarbanes-Oxley internal control provisions.