Compliance costs falling for tech firms.(UPDATE)

MORE THAN 80 PERCENT OF FIRMS IN THE TECHNOLOGY industry decreased their total cost of U.S. Sarbanes-Oxley Act of 2002 Section 404 compliance during the last year, according to KPMG's Internal Controls Study of Technology Companies. Almost half cut compliance costs by more than 10 percent. The study, which covers companies of all sizes, is divided into three categories: Sarbanes-Oxley Section 404 compliance costs, average number of key controls by process, and automated versus manual controls.

Adopting the latest Sarbanes-Oxley Section 404 guidance was one of the biggest factors impacting Section 404 cost reduction (76 percent), KPMG reports. Other factors included fee reductions by their external auditor (52 percent) and improving the quality of controls (48 percent). Companies had 4 percent fewer key controls on average in 2008--350 compared to 364 in 2007. Order-to-cash still had the highest average number of key controls among financial processes. The percentage of key controls that are automated was slightly lower in the 2008 survey (22 percent) compared to 2007 (25 percent). Also, the percentage of automated key controls was highest in the procure-to-pay cycle (40 percent), up from 35 percent in 2007.

According to KPMG, many companies can achieve better potential efficiencies leveraging the capabilities of their recent or planned enterprise resource planning upgrades and implementations. Also, companies that have not yet implemented integrated governance, risk, and compliance (GRC) systems may gain additional benefits by automating some of the organization's GRC functions, as well as establishing a foundation for unified compliance programs that combines Sarbanes-Oxley compliance with other compliance programs.

Internal Controls Study of Technology Companies is available at KPMG's Canadian Web site, www.kpmg.ca.

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