More executives at smaller companies -- those with total revenues under $1 billion -- perceive compliance with Sarbanes-Oxley as costly than those at larger companies. At smaller companies, 58 percent said compliance was costly, compared with 38 percent of executives at companies of over $1 billion.

"How companies view the added administrative cost of complying with the new law appears to be a function of size and preparedness," said Frank Brown, global leader of PricewaterhouseCoopers' Assurance and Business Advisory Services. "Larger companies with a well-established corporate reporting infrastructure are better able to handle the added certification and disclosure requirements of the new law. For smaller companies, compliance has been more of a burden."

According to the survey, 76 percent of the cost of Sarbanes-Oxley compliance is for added internal resources, and 24 percent for external assistance.  A majority of executives listed several aspects of compliance as being at least "somewhat costly," including: documentation; legal requirements; detailed policy development; self-assessment; attest requirements and certifications; and staff training. Only 41 percent cited the cost of new tools and technology.

"Much of the cost of complying with Sarbanes-Oxley lies in gathering and certifying information.  Although some companies may need to upgrade their corporate systems, to provide information required by the new law, many executives see these new capabilities as adding value beyond mere compliance," Brown said.

Forty-one percent of business leaders said they expect the cost of Sarbanes-Oxley compliance will stay about the same in the second year as in the first year; 37 percent anticipate an increase, and 22 percent foresee a decrease. Overall, compliance costs are expected to rise by an average rate of 4.1 percent.  Product sector companies expect costs to rise 6.6 percent, while service businesses predict no change in costs.

Executives said the total costs for Sarbanes-Oxley control and compliance are expected to average 10.4 percent of their management controls budget over the next two years. However, a high proportion, 42 percent, could not estimate.