Thousands of small companies in the US could be made exempt from auditing rules brought in under the tough Sarbanes-Oxley legislation, introduced only four years ago.

An influential advisory panel appointed by the US Securities and Exchange Commission is set to make the proposal as part of a multi-front assault on the Sarbanes-Oxley Act of 2002, the International Herald Tribune reported.

The Sarbox rules came into force following the scandals at Enron and WorldCom with the aim of toughening up auditing and corporate governance rules to prevent similar accounting disasters in the future.

The panel proposal would see 80% of public companies exempted from the provision that requires companies to review their financial reporting procedures and fix any problems that could lead to mistakes or fraud.

The committee proposes a full exemption for companies with a market capitalisation of less than $128m (£72m) and a limited exemption to those with capitalisations of between $128m (£72m) and $787m (£440m).