CFO's of smaller companies have told the SEC, that they need more flexibility for compliance with the Sarbanes-Oxley Act.

Two measures were suggested at a recent SEC roundtable event.

Firstly, consider letting more small companies take advantage of the internal controls extension.

Secondly, give clearer guidance on which deficiencies in internal control need to be reported.

Many lobby groups have commented on the disproportionate burden they feel because of the Act. In particular the infamous section 404 on internal controls.

Companies with a market cap of less than $75m will not have to comply with 404 until the first financial report after July 15 2006.

One possible way to include more companies in the extension is by measuring revenue rather than market cap. This view was put forward by Neal Wolkoff, chairman and chief executive officer of the American Stock Exchange, and Alan Patricof, co-founder of $20 billion private-equity firm Apax Partners

Alternatively, the market cap measure could be kept, but set at $700m. Wayne Collins, Chairman of audit firm BDO Seidman.

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