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After dropping in 2005, the cost of compliance with the Sarbanes-Oxley Act increased in 2006 for large and small public companies, with nearly one in four considering going private to escape the cost and time, according to a study by the Chicago-based law firm of Foley & Lardner L.L.P.
"Compliance costs for all companies have continued to remain high," said Tom Hartman, a partner in the Detroit office and the study's director. "People have been predicting, including the SEC, that with the Section 404 phase-in, there would be a learning curve and that costs would come down. But, in fact, costs are continuing to rise, and faster than the cost of living."
Sarbanes-Oxley was passed in 2002. Its Section 404, which required management to assess the effectiveness of internal controls, went into effect in 2004 and resulted in a spike in compliance costs that dropped off in 2005 but began to climb again last year.
The fifth annual Foley study, done in partnership...