Monday, April 04, 2005
Companies socked by Sarbanes audit rules
After WorldCom and Enron, all public companies are paying -- their accountants.
While the verdict is still out on whether the Sarbanes-Oxley Act of 2002 is a friend or foe to Corporate America, one thing is certain: The law is denting the wallets of companies big and small.
According to Boston Business Journal research, a sampling of local, publicly held companies has seen an 88 percent jump in annual auditing fees since President George W. Bush signed Sarbanes-Oxley, or SOX, into law. For many firms, the expenses have added up to millions of dollars; some have even redirected close to 10 percent of their net earnings to comply with the law's strict accounting measures.
Of the 14 companies profiled, seven highlighted specific dollar amounts spent on SOX compliance in 2004. Those outlays represented between 36 percent and 75 percent of each company's total auditing budget. In more than half of those cases, SOX-related expenses exceeded the total spent on auditing fees for all of 2003.
Among the examples: Waltham-based Raytheon Co. The defense contractor spent $7.5 million on SOX auditing fees in 2004, bringing its auditing budget to $15.2 million. Raytheon's auditing budget was only $7.3 million in 2003.
posted by Brian Moran @ 5:37 PM