February 12, 2004

FEI Conducts Internal Controls/Audit Fee

Yesterday, the FEI released a survey of 321 companies that finds that the largest U.S. companies expect to spend an average of 35,000 hours to implement Section 404 – and incur an increase of 38% over current audit fees. Companies expect to document an average of 79% of their processes – and expect external auditors will test an average of 57% of those processes.

The survey shows that companies with over $5 billion in revenue expect to spend an average of $4.7 million this year to implement 404 – and expect audit fees to top $1.5 million on average.

Governance Metrics Releases Global Governance Scores

This week, GMI released governance rating scores on 2100 multi-national companies. The accompanying press release included some interesting observations, such as:

– Canadian companies had the highest overall average rating of 7.6, followed by the United States (7.0), Australia (6.9) and the United Kingdom (6.7). Japanese companies had the lowest overall average rating at 3.0
– 414 out of the 1,835 companies with a compensation committee included an executive on this committee (59 had the CEO)
– While the total number of independent directors increased marginally from 56.1% to 57.5%, the number of combined Chairman and CEO positions fell from 47.3% to 41.6%, the number of independent chairman grew from 13.2% to 21.2% and the change in the number of lead directors jumped from 23.3% to 33.4%

Our New “Section 402” Portal

We have launched a new Section 402 Portal that contains guidance on a host of cashless exercise and Section 402 matters.

SEC Adopts Mutual Fund Disclosure Rules

Yesterday, the SEC adopted new rules requiring mutual funds to provide enhanced periodic disclosure.