Sarbanes-Oxley Study Finds Cost of Being Public Rose 33 Percent for Small and Mid-Sized Companies in 2004

SOX's Section 404 Hits Hard: Average Audit Fees for Small Companies Increased 96 percent to $1 million in FY 2004

The third annual study conducted by Foley & Lardner LLP on the costs associated with corporate governance reform shows that the average cost of being public in 2004 increased 33 percent over 2003 for a company with annual revenue under $1 billion.

Audit fees accounted for the largest out-of-pocket costs increases, with average audit fees for public companies with less than $1 billion of annual revenues increasing 96 percent to $1 million in FY 2004 from $532,000 in FY 2003. The study attributes this increase to the phase-in of Section 404 of the Sarbanes-Oxley Act, as the dramatic rise in audit costs exceed the rate of average audit fee increases witnessed in FY 2002, the year Sarbanes-Oxley was enacted.

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