Thursday, June 16, 2005
How Much Is It Really Costing To Comply With Sarbanes-Oxley?
Public companies have been complaining about the costs of complying with the Sarbanes-Oxley corporate-reform law since its passage in 2002. The outcry has intensified with the departure of Securities and Exchange Commission Chairman William Donaldson, as companies hope for new rules that might ease what they say is a financial burden.
Putting a dollar figure on how much Sarbanes-Oxley has cost corporate America is extremely difficult, though that hasn't stopped many from trying. Often-cited estimates range from $1.6 million to $4.4 million per company each year. Meanwhile, one researcher estimated $1.4 trillion in stock-market losses due to the bill's passage. But some of the estimates on Sarbanes-Oxley are as questionable as the cooked financial books that led to the measure's passage.
Alan Beller, director of the SEC's division of corporation finance, questioned some estimates in a speech last July in Boston.
Certainly, the increased auditing and record-keeping required by Sarbanes-Oxley has been costly for some companies, especially for small businesses. But few companies have disclosed how much compliance has cost them. Instead, most numbers in the debate come from surveys, where biases and methodology can skew the results.
posted by Brian Moran @ 8:58 AM