Compliance Costs

How Bad Are Compliance Costs?

The costs of Sarbanes-Oxley compliance have had huge impacts on organizations and continue to have huge impacts on the finances of organizations. In 2004, companies estimated spending $5.5 billion for SOX compliance costs, $1 million of that figure was for Information Technology, and was expecting to spend greater amounts in 2005 (Swartz, 2004). UK businesses spent $1 million for every $1 billion of revenue (Swartz, SOX compliance costs U.K. firms, 2006). Companies that only applied quick fixes are expected to spend greater amounts in the future. According to (Freeman, 2009), Section 404 is still costing more than $2.3 million a year in direct compliance costs.

Internal audit departments may have to be enlarged, or formed to meet compliance (Linda, 2006). Consultants may need to be engaged to analyze and design control systems to ensure that internal controls are proper for compliance. Organizations may...
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