SOX Center

The financial burden of Sarbanes-Oxley Act (SOX) compliance is slowly, but surely starting to ease.

The cost of compliance with Section 404 of the SOX declined by 23% in fiscal 2006, according to a survey by Financial Executives International.

The Florham Park, New Jersey-based organization found the average company spent $2.9 million on SOX compliance in 2006, versus $3.8 million in 2005 and $4.5 million in 2004.

“Technology has a lot to do with the cost reduction,” said Sanjay Anand, chair of the Sarbanes-Oxley Institute. Public companies “are actually automating their controls. A good 20 to 30%, even as much 40%, of the cost reduction is actually coming from automated controls rather than manual controls.”

These cost reductions have come despite the fact that auditors’ fees have remained relatively steady, the research revealed. External auditor fees dropped by just 11% in 2006, from $1.35 million to $1.2 million.

ComputerWeekly: Sarbanes-Oxley compliance costs drop, better processes credited

In ‘06, public companies benefited from earlier efforts to comply with the governance measure.

Public companies spent 23 percent less adhering to the Sarbanes-Oxley Act’s accounting rules in 2006, as they benefited from work done in earlier years to comply with the landmark federal corporate-governance law, a new survey found.

Complying with the 2002 Sarbanes-Oxley Act cost companies $2.92 million on average last year, compared with $3.8 million in 2005, Financial Executives International said in a statement yesterday. Costs have fallen 35 percent from 2004, the first year companies were required to adhere to the law’s accounting requirements.

The Philadelphia Inquirer: Sarbanes-Oxley costs 23% lower

Comments about proposed changes to the controversial Sarbanes-Oxley law rolled in for a final day Monday, as debate about how best to implement it continued.

Monday marked the closing of the comment period for rules proposed in December by the Securities and Exchange Commission and the Public Company Accounting Oversight Board that aim to streamline Section 404 of the 2002 corporate-governance law. The section requires both management and outside auditors to sign off on a company’s internal financial controls.

But some commentators said the auditing provision could be tweaked even further.

“The rules and standards related to the implementation of Section 404 of the act still require significant attention,” said Grace Hinchman, senior vice president of government affairs for Financial Executives International, in a statement. The group is suggesting changes including allowing for “rotational” testing of controls that have operated effectively in the past.

MarketWatch: Further tweaks urged for Sarbanes-Oxley