Leap In Sarbanes-Oxley Costs
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The looming first deadline for companies regulated by Sarbanes-Oxley is causing headaches. Big headaches. Everyone's favourite section 404 is causing the most trouble. Companies seem to have underestimated how much it will cost for compliance with 404. A survery by Financial Executives International, a US consulting firm, found costs over60% higher than January this year. Only now are companies coming to terms with how much it will all cost. Section 404 of the Sarbanes-Oxley Act deals with ensuring Internal Controls for financial reporting are robust enough. Auditors are now required to actively investigate to confirm that controls are reliable. Ironically audit costs have jumped between 25 and 35%. The FEI survey of companies with average revenues of $2.5bn found that internal control compliance cost an average $3.14m.The number of employee hours required jumped from 12,000 since January to over 25,000.
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