Total 2007 audit fees for U.S. companies rose 1.8% to an average $3.6 million, including $846,000 for Section 404 compliance attesting to management’s internal control oversight, according to a Financial Executives Research Foundation survey. The Section 404 compliance cost was 5.4% below 2006.
The results indicate a continued decline in 404 compliance costs in 2007, although “a direct comparison cannot be made from 2006 costs, as the respondent pool varies year to year,” said a statement about the survey from Financial Executives International, an affiliate of FIRF.
In the survey of 168 companies with a market value off more than $75 million, 50.3% agreed that Section 404 financial reports are more accurate; 56.0% agreed that financial reports are more reliable; 43.6% agreed that compliance with Section 404 has helped prevent or detect fraud; and 69.1% agreed that compliance with Section 404 has resulted in more investor confidence in their financial reports.
“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,” Michael P. Cangemi, president and CEO, Financial Executives International, said in the statement.
The survey was conducted earlier this month. A 21-page report on the full results is available from FEI at http://www.ferf.org/bookstore.
FEI, an association presenting views of corporate financial management, has 15,000 members, including CFOs, treasurers and controllers, at U.S. and Canadian companies.
