IT Resources Being Poured Into Sarbanes-Oxley Compliance: Survey

Companies are devoting large chunks of personnel and technology resources to complying with the Sarbanes-Oxley Act's section 404, according to a survey of CFOs, controllers, and compliance leaders by IDC and RevenueRecognition.com. Section 404 requires companies to document and test internal controls over financial reporting, and to attest to the effectiveness of internal controls in annual reports.

IT is an integral part of most companies' plans for improving business processes related to Sarbanes-Oxley compliance. Some 83% of the surveyed companies are deploying or evaluating new systems to automate financial processes such as billing and revenue recognition in order to achieve compliance. About 40% are investing in information-security and other technology for improving their IT infrastructure, and 30% are investing in document and records-management systems.

Average labor costs during the first full year of compliance are $3.7 million for companies with more than $1 billion in revenue, and $1.6 million for companies with revenue between $200 million and $1 billion, according to the survey. Among the largest 10% of companies surveyed, labor costs are averaging $9.4 million.

The complete results of the survey are expected to be released the week of Feb. 7.