More refinements urged before Sarbanes-Oxley vote

NEW YORK, July 24 (Reuters) - As U.S. regulators prepare to vote on the proposed auditing reforms for the Sarbanes-Oxley Act, some stakeholders are still wondering whether the regulators have gone far enough.

The U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board, which polices corporate auditors, recently approved new guidelines aimed at reducing costs for complying with the rule's internal control section, known as Section 404.

The SEC will vote on Wednesday on whether to approve the new standard, called Auditing Standard No. 5, or AS5, for auditing internal controls under Sarbanes-Oxley.

But with just mere hours before the vote, some are wondering whether the proposed changes will actually lower costs for companies that view compliance with the act's internal controls provisions as an excessive burden.

Of the 37 groups that sent comment letters to the SEC on the proposed rule, several fretted about technical details.

For example, this past week, a letter from the American Bar Association spent several pages outlining how the use of the word "would" could be more appropriate than the word "might" in a section of the new standard that refers to the way auditors determine a material weakness.

Others expressed larger concerns about whether the proposed changes would actually lower costs for companies.

Nasdaq Stock Market Inc. (NDAQ.O) said in a statement on Tuesday that it believed the new standard "did not provide the needed clarity or the tools to alleviate the root cause of unnecessarily onerous and costly audit processes."

The new guidance would allow auditors to identify the highest risks to a company's books, as opposed to forcing them to test a long list of internal controls.

SEC Chairman Christopher Cox testified before the U.S. House Financial Services Committee in June that he felt the reforms would indeed lower costs.

Last year, the PCAOB said auditors were still not as efficient as they could have been, even under the old standard.

Nasdaq said it wanted a clearer definition of materiality in the rule and for the PCAOB to establish an ombudsman to serve as an advocate for companies who feel their internal controls are being over-audited.

"While AS5 represents improvement over the previous standard, it does not go far enough to help decrease regulatory complexity and reduce the risk for zealous auditing," Michael Oxley, Nasdaq's Vice Chairman, and co-author of the Sarbanes-Oxley Act, said in a statement. (Additional reporting by Karey Wutkowski)