[Congressional Record Volume 152, Number 61 (Wednesday, May 17, 2006)]
[Senate]
[Page S4690]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         SMALL BUSINESS RELIEF

  Mr. BURNS. Mr. President, in 2002 Congress passed the Sarbanes-Oxley 
Act, providing important safeguards against unscrupulous accounting 
practices. In the wake of significant corporate accounting scandals, 
Congress created the Public Company Accounting Oversight Board overseen 
by the Securities and Exchange Commission. It restricted the actions of 
accounting firms who perform audits--specifically preventing them from 
undertaking other activities which lead to conflicts of interest. At 
the end of the day, this legislation is important to protect 
shareholders and employees from dishonest accounting practices that can 
cost them their futures and, in extreme cases, even their businesses.
  Section 404 of Sarbanes-Oxley requires the Commission to create rules 
for annual reports and to prescribe internal control reports to ensure 
that financial reporting is accurate and ethical. The goals of this 
provision are warranted but the burden on smaller publicly held 
companies has come at a great cost.
  Unfortunately, they are also incredibly and unnecessarily burdensome 
for small- and medium-sized businesses. In my State of Montana, it is 
these small- and medium-sized businesses that fuel the engine of our 
economy. Small businesses are collectively the largest employer in 
Montana, and it has always been important to me that the Federal 
Government consider the impact its regulatory policies have on small 
businesses.
  For this reason, I am proud to be added as an original cosponsor of 
legislation that will reduce some of the burden facing small 
businesses, specifically in section 404. S. 2824, the Competitive and 
Open Markets that Protect and Enhance Treatment of Entrepreneurs Act, 
or COMPETE Act, will not remove the important safeguards that Sarbanes-
Oxley created, but it will increase the flexibility of the law to allow 
businesses to comply with the law with less hardship.
  In 2004, the average cost for a public company to be public was $3.4 
million. One out of every three dollars spent were for audits performed 
even if there was little or no value of those audits to the investors. 
It defies common sense to have the same requirements for the largest 
public companies as we do for the smallest, and the COMPETE Act will 
offer small- and medium-sized companies the option to comply with 
standard internal control guidelines with enhanced internal controls, 
greater transparency, and specific restrictions against conflicts of 
interest.
  One of the things I have learned here in Washington, DC, is that one-
size-fits-all solutions don't work. American innovation is too diverse 
to encompass through inflexible regulations. When we passed Sarbanes-
Oxley, our intentions were to protect investors and employees from the 
minority of companies that abused accounting practices to mislead their 
shareholders. This intention remains important, but in the past years I 
have heard from Montanans about the unforeseen and unintended 
consequences of this legislation. The COMPETE Act can sort these out, 
keeping the goals of Sarbanes-Oxley intact, while increasing the 
flexibility needed to make the regulation as harmless as possible to 
honest businesses.

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