Danny McCance 4 May 2017 09:44am

US accountancy organisations fight for Sarbanes-Oxley

A joint letter was sent on Monday to the House Financial Services Committee, which opposed any change to the Sarbanes-Oxley Act

US president Donald Trump has made reducing regulation for businesses and Wall Street a central theme of his economic policy since taking office.

The letter was sent by the Center for Audit Quality (CAQ), the Council of Institutional Investors (II) and the CFA Institute.

The act, introduced in 2002, aimed to increase transparency and strengthen financial reporting enforcement for US public company boards, management and accounting firms.

It arrived in the wake of a number of high profile US scandals involving public companies.

Section 404(b) of the Act requires public companies to engage an independent auditor to attest the management’s internal control over financial reporting (ICFR).

“Investors in companies of all sizes should benefit from protections provided under Section 404(b),” said Ken Bertsch, executive director of the Council of Institutional Investors.

“As policymakers consider potential changes to financial regulation, they should take care not to undermine the frameworks that are working demonstrably to protect investors and our capital markets,” said Sandy Peters, head of regulatory engagement at CFA Institute.

The letter stated, “We do not believe S404(b) of [the Act] is a regulatory burden or impediment to capital formation.”

“In fact, we refer you to academic research that indicates that any increase in the public float threshold would not spur capital formation, and could have the unintended consequence of eroding investor confidence and the quality of public company financial reporting.”

In February, Gary Cohn, White House National Economic Council director and former president and chief operating officer at Goldman Sachs, told the Wall Street Journal that Trump aims to sign an executive order with plans to start peeling back regulations.