Christopher Cox, Chairman of the Securities and Exchange Commission has backed the Sarbanes-Oxley legislation as a good idea. Whether it has worked effectively in practice has not always happened according to Cox.

Cox's opinions were aired at an SEC conference on the Act. Senior officers covering accounting and securities at the agency have also backed the legislation. They have indicated though that they are open to suggestions for improvements.

"Sooner rather than later" was the Chairmans comment when when asked about getting the law right.

The legislation is designed to prevent fraud and accounting misstatement. Central to the act is Section 404 which requires companies and their auditors to attest to the effectiveness of internal controls over financial reporting.

Sharp rises in accounting and auditing costs have been attributed to the infamous 404.

Regulators, auditors, executives and lobby groups have been fiercely arguing if the benefits outweigh the costs of compliance.

Scott Taub, SEC Chief Accountant has said that the benefits outweigh the costs. Indeed many of the costs borne by small companies in complying with 404 are due to "gold plating" their compliance programs.

The Biotechnology Industry Organisation and the Free Enterprise Fund are on the other side. Small companies in particular they argue are hit particularly hard by the 404 compliance requirements. Their arguments were partially borne out by a General Accountability Office (GAO) report on Monday which found costs for small companies to be disproportionately large.

An SEC advisory committee has recently recommended that small companies have less onerous compliance requirements or are completely exempted.

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