So much for a one-time project: Companies will spend an estimated $5.8 billion on meeting Sarbanes-Oxley Act requirements in 2005, with more than a third planning to increase SOX spending next year, according to AMR Research.

Monday marked the initial deadline for most large public companies to start complying with SOX Section 404, which requires them to report on their internal controls. While many companies initially treated the cost of complying with the act as a one-time project, a survey of more than 200 business and information technology leaders by AMR Research showed that 36 percent plan to increase spending on SOX compliance in 2005, while 52 percent will maintain current levels, and just 12 percent will decrease SOX spending. Nearly all of the companies surveyed (98 percent) said that 2004 spending has been higher or at the level anticipated.

Over the next year, AMR Research estimated that expenditures will occur in three key areas: internal labor/headcount (42 percent); outsourced services (29 percent); and technology (28 percent); with 1 percent going for other expenses.

While technology spending only comprises 28 percent of the total SOX budget, it will increase by the largest percentage -- up 43 percent from $1.13 billion in 2004 to $1.62 billion in 2005, AMR said.

According to the report, the top five spending priorities in tech supporting SOX compliance in 2005 are document and record management; internal and external security; business process management to integrate disparate business systems; applications compliance management software; and enterprise and financial application suites.

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