According to a press release on the survey, public companies expect the costs of SOX 404 to decrease by 7.4% this year, but smaller companies – those with market capitalization less than $120 million – will see virtually no change in costs. SOX 404 requires that companies assess the controls they have in place to prevent accounting mistakes and fraud and have their external auditor attest to those controls.
A survey last year found that the average compliance bill for SOX came to $16 million (See Survey: Average SOX Compliance Bill is $16M ). After receiving many complaints from smaller companies about the impact of SOX on their budgets, the SEC again extended the deadline for SOX compliance for those companies with market capitalization of up to $75 million (See Another Extension on SOX Compliance for Small Businesses ).
The survey of executives from 298 companies of all sizes and various industries also found that more companies believe their auditors are well-trained and qualified to meet the requirements of SOX 404. According to the news release, a survey in April showed only 30% of respondents felt their auditors were sufficiently trained and qualified. Part of the improvement is attributed to additional guidance on streamlining the internal audit procedures issued earlier this year (See PCAOB To Issue Auditor Guidance for Sarbanes-Oxley ).
In spite of the costs, the release said 74% of survey respondents said the Sarbanes-Oxley legislation was necessary. However, as William Archey, President & CEO of AeA said in the announcement, “Auditors are treating these smaller companies as if they were multi-billion dollar businesses and imposing the same auditing requirements. AeA has argued that a ‘one size fits all’ approach to SOX 404 imposes unnecessary and costly burdens on smaller companies without improving investor confidence.”