The report says that for non-accelerated filers, the total average first-year cost for management assessment and additional audit fees -- using the latest guidance issued by the SEC and PCAOB -- is $78,474. That's 14 percent less than the $91,000 cost the SEC initially predicted.

The new report, "The Sarbanes-Oxley Investment: A Section 404 Cost Study for Smaller Public Companies," is based on a cross-section of 29 smaller public companies in the semiconductor, manufacturing, distribution, banking and finance, real estate, food and beverage, transportation, mining, software, energy, services, and biotech industries. The report is also based on an Audit Analytics study of actual audit fees reported by nearly 5,500 public companies.

SEC Chairman Christopher Cox is considering extending the delay in the auditor attestation requirement of Section 404(b) for non-accelerated filers until years ending after Dec. 15, 2009, as the SEC gathers cost figures. Lord & Benoit suggested this new report may provide the numbers that government officials need.

Lord & Benoit said that while analyzing the compliance cost data, the research team discovered a paradoxical, unintended consequence of past delays in Section 404 compliance: the American Institute of CPAs auditing standards governing the audit of internal controls for private companies and non-profit organizations are now greater than PCAOB auditing standards for smaller public companies in years 2007 and 2008, and possibly 2009 should the SEC grant an extension of Section 404(b).

The report states that compliance costs are not without corresponding benefits. The improvement in procedures has removed volatility in reporting and this, in turn, has contributed to the recent dramatic decrease in security class action claims against companies. In addition, the market capitalization to revenue ratio of companies with good financial reporting procedures and filings results in higher stock values.

For a free copy of the full report, go to www.Section404.org and visit the Research section.