Audit Costs Jump $1.4bn
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Auditing costs at Fortune 1000 companies have jumped by $1.4bn, since the introduction of the Sarbanes-Oxley Act in 2002. Comprehensive research by the University of Nebraska at Omaha looked at 633 companies that have reported so far under the new regime. Total audit costs rose from $2.2bn in 2003 to $3.6bn in 2004. The new research is ammunition for corporate America, which has voiced its opinion about the cost of Sarbanes-Oxley. In particular, Section 404, which requires firms to confirm the effectiveness of their internal controls. The average increase in audit fees is $2.2m. Initially the SEC estimate for increases in audit fees for SOX work was $91,000. However, it has to be noted not all of the increase is attributable to SOX compliance fees. UNO researchers state that only 10% of companies split these fees out. The 71 firms that did, had an increase of $2.6m. This corresponded with an average SOX compliance fee of $2.6m. The research also analysed the increase by industry. Banks and insurance companies, which are already heavily regulated for and audited saw the smallest increases, albeit at 65% and 72% respectively. Energy and utilities were up 100% and 105% respectively. Retailers are the big losers, with increases in audit costs of 180%.
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