A new survey says that the average cost for the internal controls provisions of the Sarbanes-Oxley Act is $3.8 million, down 16.3 percent from last year and about halfway to the drop anticipated for the second year of compliance.
Financial Executives International polled 274 public companies with average revenues of $6 billion, 238 of which are accelerated filers. It was the fourth SOX compliance survey FEI has conducted since 2004.
According to the survey, many of the cost reductions can be attributed to fewer staff, less consultant time and reduced auditor fees from a year ago: internal staff time spent on the provisions decreased 11.8 percent; external costs, including software and consultant fees, but excluding primary auditor fees, fell 22.7 percent; and auditor attestation fees dropped 13 percent.
"There is still room for improvement. Based on the feedback from our members, it is clear that the degree of documentation is the No. 1 issue," said FEI president and chief executive Colleen Cunningham, in a statement.
The survey also found that 85 percent of the surveyed companies do not believe that the benefits of compliance with Section 404 have exceeded the costs. Top recommendations from executives on how the implementation of Section 404 could be made more efficient included reducing the degree of documentation required (67 percent of respondents) and allowing for greater reliance on internal audit data and resources (66 percent of respondents).
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