The statement comes in advance of a public meeting, scheduled on December 14, of the Security and Exchange Commission's (SEC) Advisory Committee on Smaller Public Companies, at which time the SEC is scheduled to consider possible changes to current rules for smaller companies.

"The U.S. economy depends on smaller companies, particularly for innovation and new job creation," said Richard Brounstein, chairman of the FEI Small Public Company Task Force. "But as currently designed, the implementation of Section 404 of Sarbanes-Oxley drains the limited resources of small companies particularly hard. The efforts and recommendations of the SEC's Advisory Committee to develop a better approach represent a worthwhile and important investment in the future of smaller public companies to ensure they are not unduly disadvantaged."

According to the SEC Office of Economic Analysis, companies with less than $700 million in market capitalization make up about 80 percent of all public companies, but only six percent of total stock market value.

According to FEI survey data collected from public companies in March, companies with annual sales between $25 million and $99 million have seen their audit fees jump 71 percent from Section 404-related work. Those with revenue between $100 million and $499 million saw audit fees rise 66 percent, compared with an average increase of 47 percent for the largest public companies surveyed.

"The regulatory requirements of 404 have taken a 'one size fits all' approach and amount to a barrier to the growth of smaller companies," continued Brounstein. "It would be detrimental not to pursue an effective alternative that preserves the intent and spirit of Sarbanes-Oxley while being more sensitive to smaller companies. We look forward to the Advisory Committee recommendations."