From the Wall Street Journal (page C3 in the print edition):
Regulators issued a rebuke to accounting firms, saying their interpretation of a controversial Sarbanes-Oxley rule had been too strict and resulted in unnecessary costs for some public companies.
The Securities and Exchange Commission and the Public Company Accounting Oversight Board urged accountants to be more flexible in their approach to a rule requiring that companies assess their internal controls over financial reporting. Regulators said auditors had become "overly cautious" and "mechanical" and needed to exercise judgment when interpreting the rule.
The guidance comes in response to growing complaints from businesses about the cost of complying with the regulation, which requires that companies assess their internal controls to ensure their financial reporting is accurate and reliable...
Executives have complained about the rule, saying auditors are performing massive reviews that aren't tailored to a company's size or specific risks. They complain auditors are driving up costs by looking at things that have no bearing on the accuracy of a company's financial statements.
Studies have estimated the cost to companies at about $3 million a year. Some companies have said they have stopped hiring and are considering moving work overseas to deal with the costs.
I continue to think this is a much under-appreciated story.
UPDATE: A few days old, but here is a related post from Brad DeLong.
UPDATE II: The SEC report is here.