The "death by delay" strategy seems to live on. Probably because it's working.

On Friday, the SEC announced that they will give another year of clemency to small companies (under $75 million market capitalization) for complying with Section 404 of the Sarbanes-Oxley Act. You know, the part that has to do with making sure that internal controls are in place and working - and that auditors agree with managementthat said controls are working.

The rationale: "The extension of the Section 404(b) compliance date for smaller companies is the latest in a series of Commission efforts to help reduce unnecessary compliance costs for smaller companies while preserving important investor protections."

Ah. Internal controls, and proving that they exist, are "unnecessary compliance costs for smaller companies?"

After this extension for small firms - I think it may be the fifth or sixth - they should just come clean and make an exemption instead of dressing it up as "studying the problem." It's already a de facto exemption, on a year by year basis. 

In other news, the SEC laid the groundwork for more study of the problem. They announced the blessing from the Office of Management and Budget for a "real-world" cost-benefit study on the Act's internal control provisions, to be carried out jointly by the SEC's Office of Economic Analysis, the Office of the Chief Accountant, and the Division of Corporation Finance. Maybe their work will provide the groundwork for a real-world exemption. The announcement said nothing about the timing of the completion of their study, but it will have to be done pretty quickly if they want to get something effective by the end of the year - concurrent with the completion of this edition of the SEC.