Volume 14, No. 11


Audit Fees After Sarbanes-Oxley:  A Look At The S&P 500  Conventional wisdom has it that the costs of Sarbanes-Oxley compliance outweigh the benefits: there's way too much being spent to capture crooks that don't exist, the complaints go. Laws won't change human nature: anybody wanting to exploit the system will do it, anyway. Sarbox punishes everyone for the actions of a few bad actors. The list goes on and on. And plenty of numbers support those gripes: mind-numbing numbers, astronomical increases across the board. How much water is in the numbers can't be told for sure: there's no line on any company's income statement entitled Sarbanes-Oxley compliance expense that gets audited. All the investing public is left with is unproven allegations of costs in excess of benefits. (Make that loud, repeated allegations of costs in excess of benefits.) The increase in audit fees is one Sarbox compliance cost routinely demonized - but it's different in that there really is fairly precise information about those costs in the proxy statements. This report examines those costs - and their changing nature - since 2001 for the S&P 500. A surprise: the auditors aren't necessarily as well off as you think.

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