Sarbanes-Oxley Compliance Costs Decline

A survey of 185 companies by Financial Executives International found that compliance costs for Sarbanes-Oxley's internal controls audit requirements, Section 404, had declined 5.4% last year.  Total audit costs were up 2%, however.  The data will give some solace to SOX supporters.  It does not affect the basic argument against Section 404 however:  1) The SEC vastly underestimated the costs of Section 404;  2) The current costs of Section 404 still hovers around $850,000 per firm -- nearly 25% of total audit fees; 3) The early costs of Section 404 were in the million per firm; 4) Small companies are still exempted by SEC order because they simply cannot afford to comply; and 5) Section 404 has not stopped the current sub-prime mortgage crisis or any other major financial crisis  (it does catch shortfalls in penny cash discretionary accounts, however). In short, the section is still a disaster and should be repealed.