Donaldson Tackles Costs of New Rules

William H. Donaldson, chairman of the Securities and Exchange Commission, says he wants to do a cost-benefit analysis of the rules and regulations the SEC writes to implement the Sarbanes-Oxley (Sarbox) reforms. Corporate executives are complaining that the costs are high and the benefits are going to line the pockets of their accountants.

According to a survey by the Corporate Executive Board, a Washington, DC-based consulting firm that does research on best practices, the howls of protest from executives are more than justified. The survey found that the largest accounting firms have doubled their audit fees with US clients because of work mandated by the Sarbanes-Oxley Act. The increases ranged from 78% at Deloitte to 134% at PricewaterhouseCoopers. The survey of 43 companies that had to meet the new requirements in 2004 found that they spent on average $5 million to $8 million to comply with Sarbanes-Oxley.

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