SEC pledges to lower Sarbox costs

The chairman of the Securities & Exchange Commission said Thursday that the commission will announce within the next few weeks steps to reduce the cost of compliance with the Sarbanes-Oxley Act.

The U.S. Securities and Exchange Commission and the board that regulates accountants will revise the Sarbanes-Oxley corporate governance law to lower compliance costs for public companies based on their market values, the SEC's chairman, Christopher Cox, said Thursday.

"In the next few weeks the United States is going to unveil significant changes to our implementation of a particular part of Sarbanes-Oxley," Cox said from London.

The new guidelines appear to be oriented toward allowing companies to focus on materiality:

The accounting oversight board will issue a new standard next month for how Sarbanes-Oxley audits should be conducted. The revision will instruct companies and auditors to focus on "what really matters, what's material to the preparation of the financial statements and to ignore what really isn't essential," Cox said.

Sarbanes-Oxley requires companies to hire an independent auditor to verify how well their procedures for publishing accurate financial statements work. The board's revisions will make audits "top-down, risk-based" and "permit reliance on the work of others," Cox said.

I'm sure everyone in the TPM biz will be watching anxiously to see what effect these changes might have/ Will "reliance on the work of others" mean that companies will have less need to recheck the work of their administrative services? Would that be wise?