A survey of public companies finds that the Sarbanes-Oxley Act has poisoned business relationships between companies and auditing firms. According to company comments, the auditing firms have been transformed into de facto agents of the government.
“Public company auditors are now privatized regulators for the Securities and Exchange Commission.”
While SOX allows auditors to harass their clients with IRS-like powers, it also enables them to charge premium fees. Chicago law firm Foley & Lardner found that average audit fees for small public companies zoomed 96% to $1 million in 2004. Smaller companies report that lost productivity costs due to SOX compliance soared 556% $1.1 million in 2004.
