Survey finds SOx compliance costs exceed estimates
Public companies have had to dig even deeper than previously estimated to pay the costs of complying with Section 404 of the Sarbanes-Oxley Act, according to a new survey by Financial Executives International (FEI).
Companies' total costs for year one Section 404 compliance averaged $4.36 million, up 39% from the $3.14 million they expected to pay, based on FEI's earlier July 2004 cost survey. The increase stems largely from a 66% leap in external costs for consulting, software and other vendors and a 58% increase in the fees charged by external auditors.
With March 16 as the general deadline for public companies to complete an assessment of their internal controls over financial reporting, FEI recently surveyed 217 public companies with average revenues of $5 billion to gauge Section 404 compliance costs.
Their total cost of compliance averaged $1.34 million for internal costs, $1.72 million for external costs and $1.30 million for auditor fees. The auditor fees are in addition to companies' financial statement audit fees, on average 57% higher.