Sarbanes-Oxley may help the public reclaim its confidence in Corporate America, but it’s costing corporations plenty, according to a survey of chief financial officers (CFOs) by Financial Executives International (FEI), a professional organization of CFOs and other senior financial executives. Costs for complying were estimated at $4.36 million, 39 percent more than the $3.14 million they expected to pay (based on a July 2004 estimate from a previous FEI survey).
The 217 public companies surveyed estimated internal costs of $1.34 million, $1.72 million for external costs and $1.34 million for auditor fees. The majority of respondents felt that giving investors more confidence in a company’s financial reports was a benefit of Sarbanes-Oxley, but 94 percent thought the costs of compliance would exceed the benefits, a position echoed in a survey conducted by Broadgate Consultants in which 83 percent of the 105 institutional analysts and portfolio managers surveyed felt that Sarbanes-Oxley should be modified to make compliance more cost effective.
Similar concerns were voiced at a recent roundtable before the SEC.
@ www.securitymanagement.com has highlights from FEI’s Sarbanes-Oxley Section 404 Implementation Survey as well as testimony from the SEC roundtable.