The anecdotal evidence was already there, but now the hard numbers are in from an SEC report that proves smaller companies are paying a disproportionately high cost to comply with Sarbanes Oxley.  As CFO Magazine reports in a recent story on audit fees:

Small companies’ perceived cost burden is important because it’s caused a series of delays in the deadline for full Sarbox compliance. The SEC has been dogged by small-business advocates wanting extensions to Sarbox since soon after the regulator first estimated that compliance would cost firms an average of $91,000. In late 2007, under pressure from members of Congress who called for specific cost-benefit dollar figures, then–SEC chairman Christopher Cox responded with the promise of the type of study that was completed [last] Friday.

The report notes that much of the cost is allocated to in-house work necessary to get internal controls in shape.  This is a topic we’re well familiar with, as we’ve spent a great deal of time battling to help small to mid-sized companies.  An article by our Managing Patrtner, Carl Famiglietti, discussed How CFOs Can Control Rising Audit Costs [pdf] and suggested that:

Given the powerful undertow of Section 404, it is of course easy to fall into acceptance of rising fees…but there are ways to take back control of the bottom line.  Companies can follow two distinct yet equally important lines of attack:  easing costs associated with non-audit CPA advisory services and mining governance initiatives for extended ROI.

In the spirit of Carl’s article, MFA is routinely on the front lines alongside the financial departments of small to midsized companies.  With the news last week that small companies received an extension for SOX compliance to on or after June 2010, we are encouraged that the additional time will help us and non-accelerated filers craft strategies that will keep their costs down and their return on investment up.