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Sarbanes-Oxley compliance costs highlighted by GAO report

[JURIST] An increasing number of small businesses are going private in order to avoid disproportionately higher costs of complying with the Sarbanes-Oxley Act [PDF text], according to a new report [PDF text] from the Government Accountability Office (GAO) [official website]. Senators Olympia Snowe (R-ME) [official website] and Mike Enzi (R-WY) [official website] requested the report and said it showed that regulators must find ways to make it less onerous for smaller companies to file reports on the strength of their internal financial controls and fix any problems. In releasing the report, Enzi called [press release] on the US Securities and Exchange Commission [official website] to "adopt clear, unambiguous, and practical small business rules."

Congress enacted Sarbanes-Oxley in response to the collapse of Enron [JURIST news archive] and the other corporate fraud scandals [JURIST news archive] that made headlines in 2002. The Free Enterprise Fund [official website], a conservative business organization, recently announced that it was challenging [JURIST report] Sarbanes-Oxley provisions setting up the Public Company Accounting Oversight Board (PCAOB) [official website], claiming it violates the separation of powers doctrine. Other legal challenges to the act are ongoing. AP has more.

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Paper Chase is JURIST's real-time legal news service, powered by a team of 30 law student reporters and editors led by law professor Bernard Hibbitts at the University of Pittsburgh School of Law. As an educational service, Paper Chase is dedicated to presenting important legal news and materials rapidly, objectively and intelligibly in an accessible format.

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