NEWS & INFORMATION
Cheaper SOX
New Sarbanes-Oxley Compliance Process Can Save You Money
Marmann & Irons, P.C. has announced a process to allow small and medium sized
public companies to comply with Sarbanes-Oxley (SOX) 404 requirements at a
reduced cost while maintaining an acceptable level of risk.
 "Our experience with SOX 404 compliance with the accelerated filers
leads us to believe there is a better and more efficient method,"
said Fred Marmann, managing partner in the firm. "We took our
experience in 404 compliance with large companies and followed the guidance from the Public
Company Accounting Oversight Board (PCAOB) to develop an innovative approach for medium to small
companies. This 'Top-Down Approach' (TDA) helps these companies that are much more vulnerable to
the financial impact of SOX 404 compliance," Marmann said.
A May 16 PCAOB News Release made specific recommendations regarding the use of a top down
approach (TDA). The report recommended that auditors:
"use a top-down approach that begins with company-level controls, to identify for further
testing only those accounts and processes that are, in fact, relevant to internal control over
financial reporting, and use the risk assessment required by the standard to eliminate from
further consideration those accounts that have only a remote likelihood of containing a material
misstatement;"
Fred Marmann, managing partner of Marmann
& Irons noted that many auditors
of public companies have been slow to adopt the top down approach recommended by the PCAOB. "By
using our TDA," Marmann said, "small and medium size companies can dramatically reduce
the cost of compliance. What we have seen is that small companies are using similar methods for 404
compliance that they were using to safeguard company assets. The result is a much more labor-intensive
process at the lower levels of the company and greatly inflated costs of compliance." Marmann
noted that the largest companies are experiencing compliance costs of approximately .1% of revenues,
while smaller companies may see costs as high as 2.5% of annual revenues.
"Our approach is an executive approach that integrates audits, financial reporting and
financial controls. In addition, our wide ranging experience and direct communication with clients
is helpful to executives trying to understand the SOX requirements and the responsibility associated
with certification," Marmann said.
"We are convinced that our new process will provide significant benefits and cost savings
to small and medium companies. Our TDA was developed to implement audit procedures that address the
planning and effectiveness issues identified by the Board a few weeks ago," he said.
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