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Boston — The costs of compliance with Sarbanes-Oxley Act of 2002 provisions related to internal control over financial procedures dropped 23% in fiscal 2006, according to a Financial Executives International survey. Average compliance cost for Section 404 of Sarbanes-Oxley totaled $2.9 million during the 200 responding companies’ fiscal 2006 year, which usually matched the calendar year. Compliance costs dropped 23% from fiscal 2005 and 35% from fiscal 2004 — the first year the regulations went into effect. The 404 rules require management statements about the company’s internal control structure and financial reporting procedures and an auditors’ report. Law firms raced for Sarbanes-Oxley business when the law went into effect. Although auditing fees are nearly the same, companies have driven costs down through efficiency gains, helped by software, said Michael P. Cangemi, President and CEO of the Florham Park, N.J.-based FEI. “Companies have driven down compliance expenses by getting beyond the initial start-up, and now await relief from the added audit costs of Section 404,” Cangemi said. External people hours, for example, dropped 14% in 2006 to an average of 3,382 hours for compliance. Responding companies averaged $6.8 billion in revenue and ranged from under $25 million to more than $25 billion.

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