Why would Sarbox drive up audit costs for non-public companies (i.e. startups and small business owners)?
Financial statement audits for private companies are exempt from SOX.
PS: I used to be an external auditor at PwC.
Financial statement audits for private companies are exempt from SOX.
PS: I used to be an external auditor at PwC.
Don't know exactly why this is, except that the auditors themselves kept referring to Sarbox-type requirements that had become standard practice for all audits, public and private. Also, I think many of the smaller players have been chased out of the auditing field by the new complexities injected by Sarbox and relating recent developments in the field. Whatever the cause, at least in and around Silicon Valley, it is no longer easy to find a small firm that will do a quickie audit for a modest sum.
[Edit: just saw reply by tptacek - he says it much better than I do.]
A similar thing happened with security audits. Huge demand from large companies with extreme requirements has definitely raised the cost of assessments for small companies.
I'd be curious to see to what extent these non-small CPA firms latch SOX reporting requirements onto their audits or other engagements for VC's.