A Little Less Costly SOX

An FEI survey which predominately concentrated on "accelerated filers" (businesses with gross receipts exceeding $75 million, over 200 businesses) came up with an average compliance cost reduction of about 16% from Year 1 to Year 2. The average internal staff-hours were slightly over 22,000 with almost 5,000 external professional hours (other than auditors) required. Average audit fee was $1.4 million, about 13% less than the year before. Most likely benefits were heightened investor confidence (56%), greater reliability (44%), more accuracy (38%) and improved fraud detection (33%) with larger companies comparatively more likely to acknowledge a benefit. 85% of respondents continued to believe costs to exceed benefits, compared with 94% the year before. As far as advice for improving Section 404, popular suggestions included reducing degree of documentation (67%), greater reliance on internal audit (65%), clarify definition of "key controls" (55%), make exceptions for new systems installed in second half of year (45%), clarify "significant deficiency" (42%) and clarify "material weakness" (35%). Financial Executives International (FEI) provides a free press release and executive summary on the link included in the title of this post. A detailed report is available at no charge to FEI members but $99 to the general public.