Sox has turned out to be a continuing cost item (bonanza), and not the one-off expense that listed companies (accounting firms) had hoped (feared). Year on year audit fees for US-listed companies continue to rise, according to a report by Foley & Lardner, as described by the Financial Times. The finding gives lie to the conventional expectation that SOX costs would largely be borne in the early years following enactment, as companies scrambled for 404 compliance. As a result of rising audit fees, SOX restrictions on non-audit services have not harmed accounting firms as was feared. Instead, total fees have risen since 2001, the year before SOX was enacted.
The report also confirms the disproportionate impact of SOX on small firms that many, including my colleague Bill Carney, have previously detailed. Fees paid to auditors nearly doubled on average between 2001 and 2005, and last year audit fees paid by small companies rose 22 percent. For the biggest companies, by contrast, total fees climbed by only a percentage point.
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