Administration February 3, 2006

Compliance Costly but Beneficial

March 2, 2006 (PLANSPONSOR.com) - North American companies could spend as much as $27.3 billion on compliance work in 2006, with $6 billion of that being spent on Sarbanes-Oxley compliance, according to an AMR Research survey.

Reported by

Rebecca Moore

Reuters reports that AMR said compliance costs are expected to grow to $28 billion for 2007.

Much ado has been made concerning the increase in compliance spending caused by the passing of the Sarbanes-Oxley Act (SOX) in 2002 (See Small Cos Won’t See SOX Implementation Costs Decline). SOX compliance spending accounted for around 22% of total compliance spending, according to the survey. However, Reuters said, companies were also likely to spend heavily in customer compliance, document and record retention, meeting Securities and Exchange Commission regulations, working with manufacturing and supply chain traceability, as well as complying with the US Food and Drug Administration.

While the costs were high, though, the survey showed that companies believe compliance is beneficial to business. About 36% of executives said that compliance helped to streamline business process, while 28 percent said it led to better quality.

Of the 325 business executives polled, about 75% said they would use investments for compliance to support other business activities, and companies plan to spend $8.8 billion in 2006, on compliance-related technology, the survey showed.

Reports on the survey can be found here .