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Volume 32, Issue 3

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Thursday, 22 November 2007 02:59

Ready for Section 404?

Written by  Larry Baye

It is no surprise that public companies continue to struggle with the tasks of evaluating their internal controls and financial reporting systems, brought about by passage of the Sarbanes-Oxley Act (SOX) in 2002. What may be surprising to some is the cost in terms of both manpower and actual financial resources of complying with the act, especially for mid-size companies. In fact, Financial Executives International (FEI), the leading professional organization serving chief financial officers (CFOs) and other senior financial executives, recently conducted a survey of 321 companies on their estimated costs for first-year compliance and, according to the survey, total costs could exceed $4.6 million for each of the largest U.S. companies. The added costs are driven by a projected investment of 35,000 hours of internal manpower, $1.3 million in spending on external consulting and software, and additional audit fees of $1.5 million (a 35 percent jump). For all participating companies in