Compliance is inflating finance costs

The Sarbanes-Oxley Act is more than five years old, but the cost of the landmark legislation to public companies continues to rise. That fact, well known in the corporate finance trenches, was confirmed last week by advisory firm Hackett Group’s 2007 Finance Book of Numbers, an annual benchmarking study that analyzes the efficiency and effectiveness of corporate finance departments.

The Hackett study found that after nearly a decade of cost reductions in the finance department, the average “global 1000” company spent 12% more last year on its finance function than it did three years ago. And the biggest driver of that increased cost was compliance-related activities.

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