For Darryl Baker, it's hard to tell which is worse: the sheer cost of complying with Section 404 of Sarbanes-Oxley or the aggravation. Baker, controller of Mobility Electronics Inc., a Scottsdale, Ariz.-based company with $85.5 million in revenues, has had to go through the auditing process every year since SarbOx went into effect. During that time, auditing fees have more than doubled, to $633,000. But simply enduring the excruciating process itself has proved equally painful. "I've seen auditors spend most of their time on lower-level controls, like making sure vouchers for purchases of supplies were properly authorized," he says. "They focus on things that ultimately have little real impact."

Now, thanks to new proposed guidelines from both the Securities and Exchange Commission (SEC) and Public Company Accounting Oversight Board (PCAOB), Baker and executives at other small-and-midsize public companies might experience some relief. The pertinent question, of course, is how much.

The proposals–both of which came out in December 2006–are aimed at making Section 404′s internal control stipulations more efficient and less burdensome for companies and auditors. Both sides of the audit–management and auditor–would now be able to rely more on their own experienced judgment rather than having to show every dotted i and crossed t in duplicate. (Separately, the SEC also issued another extension for non-accelerated companies–those with less than $75 million in public float–to comply with Section 404. It also added that audit reviews will not have to be completed until the year after management files their assessments.)