As companies make progress in complying with Section 404 of Sarbanes-Oxley, their estimates of what the effort will cost them are skyrocketing. A Financial Executives International (FEI) survey of 224 companies in July found that the average estimate of 404 costs had jumped 62%, to $3.14 million, from the $1.93 million that companies projected in a January FEI survey.

The biggest increase came in internal costs, the estimates of which jumped 109%. In January, companies expected to spend an average of 12,265 internal hours on 404 work, but by July that estimate had more than doubled, to 25,668 hours. On average, just 27.4% of those hours represented the work of internal auditors, FEI says.

Companies also expect to use more external hours in preparing for 404, with the average estimate at 5,067, up from the 3,049 external hours that they had estimated they would use in January. Expectations for software costs rose 41% to $1.03 million, from $732,100, and estimates of auditors' attestation fees have risen to an average $823,200, up almost 40% from $590,100 in January.