Sarbanes-Oxley Costs for Compliance Decline

NEW YORK -- A survey of financial executives offers signs of hope for containing the costs of complying with the Sarbanes-Oxley Act, even as overall audit expenses rose last year, The Wall Street Journal reported Thursday.

The Financial Executives International (FEI) survey of 185 companies, conducted in late March and early April, found that larger firms spent an average of $3.6 million on total audit fees last year, up nearly 2 percent from 2006. But overall, there was a decline of 5.4 percent in the cost of auditors' reviewing the effectiveness of corporate management's internal controls over financial reports, as required by the Sarbanes-Oxley law, the paper reported.

Higher hourly rates for auditors likely explains why total costs are rising even as internal-control review costs fell, the FEI said. Larger companies paid an average of $210 an hour to auditors last year, up 5 percent from 2006, while smaller companies saw similar increases, the paper reported.

Larger firms, which accounted for more than 90 percent of those surveyed, spent about $846,000 on average for auditors' internal-controls reviews last year, nearly 24% of total audit fees, according to the survey, the paper reported.

For smaller companies, total audit fees averaged $500,000 last year, up 5.4 percent from the prior year, according to the survey. However, just 9 percent of those fees were devoted to the internal-controls reviews, reflecting that smaller firms aren't yet required to undergo such reviews, the paper reported.

-- NYSSCPA.org News Staff

Posted on 5/1/08