The average US community bank expects to spend more than $200,000 and devote an additional 2000 internal staff hours to comply with Section 404 of the Sarbanes-Oxley Act of 2002.
The figures come from an Independent Community Bankers of America (ICBA) survey of 91 publicly-held community banks. According to the survey, community banks expect that the internal control attestation requirements of Section 404 will increase outside audit fees an average of $87,198 - approximately 52% of total annual financial statement audit fees.
Including outside audit fees, consulting fees, software costs and vendor costs, ICBA says the average community bank will be spending more than $200,000 and devoting over 2,000 internal staff hours to comply with the Act.
Camden Fine, ICBA president and chief executive officer describes Section 404 as a regulatory burden that disproportionately affects community banks.
"Since community banks are already highly regulated and closely supervised entities, there is little added public benefit associated with these costs," he says.
The trade association is using the stats to call for Sarbox expemtions for community banks, in particular from internal control requirements.
"Banks have been subject to the internal control attestation requirements of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) since 1991," says Fine. "Those requirements exempt banks with assets of less than $500 million. Now that the banking agencies are looking at raising the $500 million FDICIA threshold, Congress and the Securities and Exchange Commission should consider a similar exemption for community banks from Section 404."