One of the key provisions of the Sarbanes-Oxley Act was that corporate managers inform investors about just how well they were minding the store.

That provision, known as Section 404, requires companies' executives and their auditors to assess the state of companies' internal controls. Internal controls are a system of checks and balances over financial accounting that are designed to prevent corporate fraud.

But because of a series of delays by the Securities and Exchange Commission, small companies still don't have to comply with the provision, four years after President Bush signed the landmark law.

What's more, they may not have to anytime soon if their advocates in Washington, D.C., continue to have their way.

That notion has some corporate watchdogs worried. There's a growing buzz in Congress and in other political circles to revise, or even roll back, the internal-controls requirements, says Lynn Turner, managing director of research at Glass Lewis, a firm that advises institutional investors about how to vote corporate proxies.

"The real purpose behind the SEC effort is to delay long enough to prevent the law from ever becoming implemented," warns Turner, the commission's former chief accountant.

For the most part, small-business advocates who have pushed for the delays insist that repeal of Section 404 is not their goal. It's important not only for small companies to have internal controls but also for them to report on those controls, they say.

The problem is that the standards for smaller companies and the way auditors have gone about testing internal controls for them are simply too burdensome, advocates say.

"Everybody agrees that internal controls are good. The problem is the way 404 is being implemented," says Steve Bochner, a partner with Wilson Sonsini Goodrich & Rosati and a member of the SEC's advisory's committee on small companies.

Studies reviewed by the committee suggested that the costs of complying with the rule were as high as 1% to 3% of total revenue at small companies, says Bochner. Those amounts can mean the difference between profit and loss at some firms, he says.

With that in mind, Bochner's committee recommended that the SEC exempt smaller companies from the internal-controls provisions of Sarbanes-Oxley until they are revised to make them more cost effective.

The debate about whether and how small companies should assess and report on their internal controls largely focuses on companies that have public floats worth less than $75 million. Companies in that group -- which represent about 4,450 public companies -- are the ones that have yet to report on their internal controls.

In contrast, larger companies, which include the Fortune 500 and most public companies that are household names, began complying with the internal-controls requirements last year.

But the debate could even affect those larger companies.

The fears about the costs of complying with the internal-controls provisions are largely drawn from the experiences of small and midsize companies that already must comply with it.

Presumably, any revisions could mean cost savings for those companies -- and looser requirements.

Bochner and other small-companies advocates have found a ready ear at the SEC. Earlier this month, the commission proposed pushing back the deadline to a time when small companies would have to report on their internal controls. Current SEC rules would require U.S. companies that aren't already doing so to report on their controls commencing in their annual reports that cover fiscal years ended after July 15, 2007.

The proposed delay pushes that back to years ending after Dec. 15, 2007. What's more, such companies wouldn't have to include their auditors' evaluation of their internal controls until their following year's annual reports.

Assuming that the commission approves the delay, it would mark the fourth time the SEC has postponed the need for small companies to report on their internal controls.

But the SEC is going beyond just pushing back the deadlines again. The agency is considering whether to give corporate managers guidelines on how to assess the controls at their companies.

To date, the SEC has simply recommended one particular system of controls but hasn't given detailed advice to corporate managers on how they can assess whether their own system is working.

Additionally, the Public Company Accounting Oversight Board, which regulates the accounting industry and is overseen by SEC, said in May that it is considering whether to revise its rule governing how such firms audit companies' internal controls.

Among the changes the PCAOB is considering are clarifying what constitutes a significant weakness in a company's controls and whether audit firms should be able to use more of their own judgment in determining such weaknesses. The SEC's most recent proposal to postpone the reporting requirements was largely due to the expectation that it and the PCAOB would soon revise their rules on internal controls, says John Nester, a commission spokesman.

"It doesn't make sense to have companies ramp up and participate in an auditing standard that's about to change," he says.

And that might not be the end of the delays for small companies. Assuming that the SEC and the PCAOB revise their rules, some small-business backers are calling for bigger companies that already comply with the internal-controls rules to test them out before small companies have to comply with them.

"We hope the regulators get it all right," says David Hirschman, senior vice president at the U.S. Chamber of Commerce. "But the reality is that the new standards are going to need a full year to see if they work. We may find things that don't work as fully as they anticipated."

But corporate and accounting watchdogs say investors aren't well served by further delays. For all the complaints about the costs to small businesses of complying with the internal-controls provisions, the indications are that those are the companies in most need of scrutiny, they say.

Such watchdogs point to data on restatements, which often indicate a breakdown in controls. Some 39% of the restatements filed by public companies in 2004 were by companies with less than $100 million in sales, according to the most recent report on the subject by Huron Consulting Group.

Companies with less than $250 million in sales accounted for more than half of all restatements that year.

Small-company advocates often talk about how important they are to the economy thanks to all the jobs they create, notes Jack Ciesielski, publisher of the Analyst's Accounting Observer.

"If they're really that big and that important, wouldn't it be nice to know that they're taking care of business and watching the store?" Ciesielski says.

It might be, but don't expect to know one way or the other anytime soon.