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Tuesday, March 22, 2005

Sarbanes-Oxley Spending In 2004 More Than Expected

Spending for section 404 compliance averaged $4.4 million in 2004, a recent survey finds.

The first year of complying with section 404 of the Sarbanes-Oxley Act has come at a steep cost for many businesses, with greater-than-anticipated personnel, consulting, auditing, and software expenses, according to a survey by Financial Executives International, a professional association of CFOs, treasurers, and financial controllers.

The good news is that the cost of compliance efforts is expected to decrease this year as IT projects undertaken to meeting the financial-reporting requirements of section 404 progress.

Companies like Eastman Kodak, SunTrust Banks, and Toys R Us have reported accounting problems that may preclude their issuing such a statement in their 2004 annual reports.

Uncertainty over auditing procedures for section 404—final guidelines weren’t adopted by the Securities and Exchange Commission until late last year—was cited as a major reason for the variance between estimated and actual costs.

Ninety-four percent of the March survey respondents say the costs of Sarbanes-Oxley compliance exceeded the benefits.

Personnel and external costs are expected to decline by 39% on average through adoption of more-efficient compliance processes and procedures.;jsessionid=20JC5RPZDVSV4QSNDBGCKHSCJUMEKJVN?articleID=159904261

Posted on 03/22