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Business Services Industry

Audit angst

Entrepreneur, Dec, 2003 by Jennifer Pellet

AUDIT ANGST: Don't be surprised if this year's tab for auditing and accounting services takes your breath away. Thanks to financial certification requirements laid out by the Sarbanes-Oxley Act of 2002, many companies are seeing double-digit and, in some cases, triple-digit hikes in external audit and accounting service fees.

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Public companies--required by Section 404 of the act to establish and maintain internal controls to ensure proper financial reporting and have an outside auditor assess the effectiveness of those controls--will see the largest price jumps. But Arthur Andersen's demise has bred hypervigilance throughout the auditing and accounting community, which means private businesses are also likely to see a spike in fees, says David Cornelius, vice president of financial service solutions at Costa Mesa, California-based financial consulting firm FileNet Corp. "There's a squeeze on resources," says Cornelius, who notes that companies can minimize the impact by doing as much of the procedural legwork as possible in-house. "One way to contain accounting and auditing costs is to clearly document policies about issues that have a material influence on financial statements, such as procedures [used to] recognize revenue or account for assets."

Business Services Industry

Audit angst

Entrepreneur, Dec, 2003 by Jennifer Pellet

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