Section 404 compliance cost corporate America less in Year 3 of its adoption, than in each of the first two years, according to a recent survey.

According to Financial Executives International’s sixth Sarbanes-Oxley compliance survey, of 200 responding companies (with average revenues of $6.8 billion), total average cost for Section 404 compliance was $2.9 million during fiscal year 2006, a 23 percent decrease from 2005 totals.

The poll included results from 172 “accelerated filers”-- companies with market capitalizations above $75 million.

The data also revealed reductions in internal and external costs of compliance, with internal staff time decreasing by 10 percent.  FEI said that the lower costs can be attributed to companies’ increased efficiencies in complying with Section 404. 
“Companies have driven down compliance expenses by getting beyond the initial start-up, and now await relief from the added audit costs of Section 404,” said FEI president and chief executive Michael P. Cangemi, who also noted that audit fee costs have remained virtually unchanged.  “While there is still work to be done, we have come a long way, and total compliance costs have dropped about one-third since Year 1.”

Cangemi said that the cost drop is largely attributable to increased efficiencies, a positive learning curve, and technical systems and software rollouts.

For each benefit of the internal control provisions, the survey revealed a direct correlation between the benefit and the size of the company, with a greater percentage of larger companies on average agreeing with the value of the benefit.

The full survey results, including costs by company size, historical cost comparisons and an executive summary, are available for $99 at

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