Companies say internal controls are far stronger than before, but fear of noncompliance and updated reporting regs means businesses are spending more on Sarbanes-Oxley auditing and consulting than ever before.

How much is compliance worth? A recent survey by Financial Executives International (FEI) of 217 public companies shows they spent an average of $4.36 million – each – in 2004.

Worse, those bills were 39% greater than the companies had projected and budgeted for. And the cited figures don’t take into account additional staff hours spent on compliance issues or new positions created to better handle the workload.

But there’s good news: As expensive as compliance activities have been to get off the ground and running, they’re one of the largest opportunities for companies to cut costs. Every dollar Finance can save goes directly to the bottom line or frees up cash for other investments.

And once new compliance and auditing processes are operational, the cost of implementing and running them should level off. As the “learning curve” flattens, Finance will be able to:

• Complete documentation activities in a fraction of the time,
• Test controls less frequently, and
• Boost communication between a company and its auditors.

Some reorganization in the Finance and Accounting departments will give employees a chance to help in other areas. Instead of focusing all of their time and effort on compliance activities, they’ll be able to dedicate the resources to other productive areas.