Sarbox compliance costs to fall 40%

The costs of complying with Section 404 of the Sarbanes-Oxley Act are expected to drop by 40% in the second year under the new rules, according to a survey.

A sample of the Fortune 1000 companies by consulting firm CRA International, undertaken on behalf of the Big Four, showed that costs associated with meeting the regulations on internal control the second time around will be much smaller for both larger and smaller listed companies.

Reduced documentation is cited as the major reason for the fall although increased efficiency in internal control and a change in remediation efforts has also helped, according to CRA.

The average cost of compliance for larger companies, with a market capitalisation of $700m (£396m) or more, will fall from $7.3m in the first year to $4.3m in the second. Smaller entities, with a market cap of between $75m and $700m will see an average drop from $1.5m to $900,000.