As of last week, 31 public companies in North and South Carolina have filed their proxy statements this year, and 27 have experienced a rise in their audit fees, according to the Charlotte Business Journal. The average increase: 23 percent.
The largest hike was experienced by Charlotte-based diversified manufacturer Carlisle Cos. Inc., which reported a 127 percent increase, to $750,000.
“What you are seeing now are largely [increases] from the events that led to Sarbanes-Oxley,” said Trent Gazzaway, national director of corporate governance for audit firm Grant Thornton and a partner in its Charlotte office, according to the paper.
The auditing bill could soar even more as the remaining provisions of the landmark legislation are phased in during 2004 and 2005. “Certainly when Section 404 [of Sarbanes-Oxley] kicks in, you will be seeing a lot more costs,” added Gazzaway.
“This is a sea change,” said Bob Bratton, chief financial officer at First Charter Corp., Bratton — whose company’s audit costs rose 37.5 percent last year, to $282,480 — told the paper that the added expenses “will be in your cost structure forever. This is not a one-time thing.”
A spokeswoman for Goodrich Corp., one of the few Carolina companies whose audit costs fell, conceded that the main reason for the decline was that the traditionally acquisitive company didn’t buy any companies last year. Acquisitions generally require more work from auditors and drive up audit costs, she added. The Business Journal also pointed out that Goodrich also spun off some of businesses the prior year, further lessening auditor workload and expense.
Another company that reported a decrease in audit costs — The South Financial Group — acknowledged that its audit costs would have increased had it not seen its acquisition-related audit-services bill decline from $350,000 in 2002 to $75,000 in 2003.
“Some of the costs of just getting ready for Sarbanes-Oxley drove up costs anywhere from 30 percent to 100 percent” in 2003, said Michael Baker, managing partner at Deloitte’s Charlotte office. This year, he added, “you can look for another similar amount.”