Changes

"Widely deemed the most important piece of security legislation since formation of the Securities and Exchange Commission in 1934, the landmark Sarbanes-Oxley Act of 2002 was born into a climate still reeling from the burst of the high-tech bubble and fraud scandals at Enron and WorldCom. Its intent was to improve corporate governance and restore the faith of investors, but many in the business world spoke out against SOX, viewing it as a politically motivated over-correction that would lead to a loss of risk-taking and competitiveness."  "'We took a cost/benefit approach when considering SOX,' explains Srinivasan. The most worrisome part of the act on the business side was the mandate that required public companies to obtain an independent audit of their internal control practices. The cost of this requirement, he says, was felt most acutely by smaller companies, although it was ultimately deferred for companies with market caps of less than $75 million and made permanent in the Dodd-Frank Act. Audit standards also were modified in 2007, a change that reportedly reduced costs for many firms by 25 percent or more per year."