The finance costs for public companies to comply with theSarbanes-Oxley Act is rising, according to the Hackett Group’s 2007 Finance Book of Numbers, reports Andrew Osterland of Financial Week.
The Book, anannual benchmarking study that analyzes the efficiency and effectiveness of corporatefinance departments, found that after nearly a decade of cost reductions infinance, the average “global 1000” company spent 12 percent more last year onits finance function than three years ago, according to Financial Week. Compliance-relatedactivities were seen as the biggest driver of the increased cost.
“We expected costs to back off from where they were, butthey’re not coming down,” Bryan Hall, a managing director and practice leaderof the finance executive advisory program at Hackett, told Financial Week.
Additionally, the compliance cost-efficiency gap between “world-class”organizations – including the top 22 performers of the 220 companies studied –and the rest of the group is widening, according to Financial Week. Companieslike Alcoa Dow and General Electric on average spent 47 percent less onexternal audit fees than their peers, and operated with 44 percent fewercompliance staff.
Meanwhile, law firm Foley & Lardner’s fifth annualsurvey of the costs of being a public company found that fees paid to externalauditors for all sizes of companies in 2006 were four percent higher than in2005, and were an astonishing 271 percent higher than in 2001, the year before SOXwas passed, according to Financial Week.