High Cost of Wearing SOX

The costs of complying with Section 404 of Sarbanes-Oxley are
starting to hit home throughout corporate America. A survey
released last week by Financial Executives International (FEI) said
first-year compliance with SOX could exceed $4.6 million for each
of the largest U.S. companies. The survey, of 321 companies
nationwide, said that the average cost-of-compliance estimate for
all companies in the survey - 20% of the respondents were from
companies with more than $5 billion in annual revenue, compared
with 3.3% in the under $25 million category - was just under $2
million. The $2 million equaled 12,000 hours of internal work and
3,000 hours of external work, plus additional auditor fees of
$590,000. Section 404 of SOX requires each annual report of a
company to contain 1) a statement of management's responsibility
for maintaining procedures for financial reporting and 2)
management's assessment on the effectiveness of such reporting.