Earlier today (April 30) Financial Executives International (FEI) released its seventh in a series of surveys of the costs and benefits of internal control reporting (management’s report on internal control, and the related auditor’s attestion on internal control) under Sarbanes-Oxley Section 404.
In brief, the FEI survey results released today showed:
- a decrease in total cost of compliance with Section 404 (internal costs within the company to facililate 404 reporting, and external costs, including audit fees).
- an increased sense of benefits from Section 404 (enhanced investor confidence in financial reporting, enhanced reliability of financial reporting, and enhanced ability to prevent and detect fraud). Although showing an increase from prior years, sentiments as to benefits from 404 are still split, as shown in the press release.
- a 5.4% decrease in auditor attestation fees attributable to the Section 404 portion of the integrated audit. (That portion was estimated by this year’s respondents to be 23.7% of total audit fees).
- a 1.8% increase in total audit fees (i.e., for the integrated financial statement audit and internal control audit).
"As companies continue to find efficiencies in complying with Section 404 and make compliance part of a routine practice, we have seen a continued decline in costs," said FEI President and CEO Michael P. Cangemi. "While 404 auditor costs also declined 5.4% as the auditor scope of work narrowed, these costs were offset by a reported five percent increase in the average hourly audit rate charged by auditors."
The report containing full survey results is available for free to FEI members, and non-members can purchase a copy of the report for $99 from the online bookstore of FEI’s research affiliate, the Financial Executives Research Foundation (FERF). Questions about reprints and content licensing should be directed to Cheryl Graziano, Vice President, FERF Research & Operations, at 973-765-1064 email@example.com .
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