Small Banks Claim SOX Exemption
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Yet another industry lobbying group has lobbied Washington, to relax the compliance obligations for Sarbanes-Oxley. This time it is the Independent Community Bankers of America (ICBA). The group which represents typically small banks, is calling for a relaxation in the auditing requirements and guidance for the auditors. Banks have been complaining about the sometimes over-zealous behaviour of some. In addition they argue that an exemption should be granted to banks based on their assets rather than market capitalisation. Those with assets less than $1bn should be exempt from section 404. 404 is the most contentious part of Sarbanes-Oxley. Companies not only have to put in place an internal control framework, but also confirm its effectiveness for protection of financial reporting. It is clear from our recent community bank survey that complying with Section 404 of Sarbox is a major financial burden for many publicly held community banks, said Camden Fine, ICBA president and chief executive officer. Part of their rationale is that legislation was passed to stop WorldCom and Enron type frauds. The group claim that community banks are not involved in those sort of frauds. The cost of compliance is also a bugbear, with members reporting an increase in audit costs of 52% to $202,000
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