Compliance Sticker Shock

Financial services companies have reported higher-than-expected costs in dealing with the demands of compliance, according to a survey released this spring by Financial Executives International (FEI; Florham Park, N.J.), a financial professionals' networking and advocacy membership group.

FEI polled 217 public companies with average revenues of $5 billion to gauge Sarbanes-Oxley Section 404 compliance costs. The survey found that the one-year costs of compliance averaged $4.36 million, an increase of 39 percent from the $3.14 million that companies expected to pay, based on a July 2004 cost survey conducted by FEI. Just more than half of all respondents said they believed Section 404 gives investors and others more confidence in companies' financial reporting; of companies with revenues of more than $25 billion, that figure jumps to 83 percent. But 94 percent agreed that the cost of compliance exceeded its benefits.

See full Article.