SEC's expansion of Sarbanes-Oxley Act could mean big costs for smaller companies | News for Dallas, Texas | Dallas Morning News | Will Deener | Business Columnist | Dallas Morning News:
"Professor Peter Iliev said he nailed down the cost of Section 404 compliance by examining companies with market caps just above $75 million and those just below it. Those below that cap have not had to comply until now.
'We needed a control group that didn't have to comply,' Iliev said. 'This allowed us to look at those who did comply and attribute any differences to the new regulation.'
What he found was that there were some rim-rocking costs associated with auditing internal controls. These smaller firms had to pay an additional $697,890 in audit fees in 2004 – the year he examined – which amounted to a 98 percent increase over the companies not in compliance."
BTW here is Iliev's paper which is forthcoming in the Journal of Finance.