Compliance with Sarbanes Oxley has been a costly affair. In a recent roundtable on corporate governance and SOX, one speaker discussed how the actual costs of complying with Sarbanes Oxley had far exceeded the estimates. He remarked that intially in the estimates were around $2.5 billion which had gone upto $6.1 billion. These estimates were for all companies required to comply with Sarbanes Oxley. Jennifer one of the other speakers and a director in one of the big 4 accounting firms explained the break of the cost estimates. Here is what she had to say.

- 40% of all SOX compliance costs were related to internal labor and head count.
- Second largest area was non-IT outsourcing services i.e. consulting and advisory services which was around 35% of the total expenditure.
- Companies spent almost 24% on technology including sarbanes oxley documentation and other softwares etc.
- The remaining 1% was other related costs.

All of the members including the audience agreed that technology would have a major role to play in compliance in the future as more and more companies look for softwares for compliance. As a result, within the cost estimate breakup the costs related to technology would definetly be expected to rise in the future. However, the overall estimate of cost i.e. $6.1 billion is more or less expected to remain the same with probably a 10% increase.

Related Posts

Controls Over Financial Closing Process
IT Governance for Sarbanes Oxley