The below excerpt is from Webcpa.com.  This is a great article outlining reasoning as to why small companies should not be exempt from SOX 404 Audits.

"CAQ Fights for SOX 404 Audits of Small Companies

WASHINGTON, D.C. (MAY 20, 2010)

BY WEBCPA STAFF Cindy Fornelli

The Center for Audit Quality and the Council of Institutional Investors are protesting two proposed amendments to the financial regulatory reform bill that would exempt smaller public companies from compliance with Sarbanes-Oxley Section 404(b) audits of their internal controls.

The two organizations have written to the Democratic and Republican leaders of the Senate and the Senate Banking Committee to protest the two proposed amendments, introduced by Sen. David Vitter, R-La., and Kay Bailey Hutchison, R-Texas. The version of the financial reform legislation passed by the House last December already includes such an exemption (see Critics Assail Small Co. 404 Exemption)."

Read the full article by clicking here.