AMR is predicting that budgets allocated to head count will fall by 8% next year to $2.3 billion, or 39% of total spend on SOX compliance. Technology spending will grow by more than 13% in real dollars over 2005, to $1.9 billion or 32% of total spend. Money funneled into external consulting, excluding audit fees, is expected to hold steady in 2006 at $1.8 billion or 29% of the total SOX spend.
AMR Research compliance guru John Hagerty attributes the shift in spending in part to better guidance from the Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB), the watchdog for public accounting firms. The SEC, under fire last year as SOX spending ballooned, issued statements in April, urging management and accounting firms to abandon a "cookie cutter" approach to SOX and exercise professional judgment "focused on reasonable, as opposed to absolute, assurance."The better guidance apparently has given companies the confidence to move beyond the generic checklist approach to SOX. AMR found that many companies focused