The Fostering Innovation Act (HR 4139) has passed the House of Representatives on a voice vote today. The bill originally passed the House Financial Services Committee in March on a vote of 42-15. The legislation was sponsored by Representatives Kyrsten Sinema (D-AZ) and Michael Fitzpatrick (R-PA). The bi-partisan legislation will extend for 5 years the temporary auditing exemption for emerging growth companies to comply with Section 404(b) of Sarbanes-Oxley.
Sarbanes-Oxley has been criticized for the excessive cost added for companies as they strive to comply with the rules. Sarbox, enacted largely in response to huge corporate scandals such as Enron, did not take into consideration the size of companies required to comply with the rules. Some smaller firms simply cannot afford the cost of compliance.
HR 4139 will give smaller firms additional time to comply.
Jeb Hensarling, Chair of the House Financial Services Committee, stated;
“I believe most of us would agree that our economy works better for all Americans when small businesses can focus on creating jobs rather than navigating bureaucratic red tape.”
