Wednesday, April 13, 2005
Sarbanes-Oxley Exposes Missteps as Audit Costs Spur Gripes
April 13 (Bloomberg) -- Yellow Roadway Corp. says it spent almost $10 million last year in a dash to meet new federal audit rules. The biggest U.S. trucker hired 10 employees, added another 20 consultants and had to write new software. Fees to its auditor more than doubled to $4 million.
For its effort to meet the mandates of the 2002 Sarbanes- Oxley Act, Yellow Roadway got a clean bill of health from its auditor, KPMG LLP. Others were less fortunate. Auditors required more than 360 large companies to declare ``weaknesses'' in their financial controls, and as a result 400 companies filed annual reports late. Average audit fees for the 100 largest U.S. companies last year jumped 45 percent to $13 million.
Congress probably won't change Sarbanes-Oxley. Instead, when executives gather today at a U.S. Securities and Exchange Commission hearing on the law, they'll take aim at the implementing regulations they say are causing an excessive burden in money, time and stress. They may also target their accountants.
``There were benefits, but the benefits were greatly exceeded by the costs of the law,'' says Donald Barger Jr., 62, chief financial officer at Yellow Roadway, based in Overland Park, Kansas. ``These costs have to be cut.''
The extra $10 million Yellow Roadway spent meeting the audit rules would have been enough to buy about 130 new, heavy-duty truck cabs costing about $75,000 apiece.
Today's hearing comes as business groups, led by their Washington lobbyists at the U.S. Chamber of Commerce and other trade associations, are pressing regulators at the SEC and the Public Company Accounting Oversight Board to ease their guidelines and interpretations of Sarbanes-Oxley. The antifraud law was passed in the aftermath of accounting scandals at WorldCom Inc. and Enron Corp.
posted by Brian Moran @ 11:47 AM