Study: Sarbanes-Oxley Results in More Pay For Internal Auditors

The study shows that internal auditors' salaries have increased on average 27 percent last year. Public accountants on the other hand saw their salaries drop more than 10 percent last year.

Source: Inside INdiana Business

Press Release

VALPARAISO, Ind. - Passage of the Sarbanes-Oxley Act in response to corporate scandals appears to have been a boon for internal auditors, according to an annual survey of accountant salaries performed by two professors at Valparaiso University's College of Business Administration.

"Part of the Sarbanes-Oxley Act is that companies must strengthen their internal controls of accounting," says Dr. Karl Reichardt, associate dean of Valpo's College of Business Administration. "Those people who are internal auditors are in greater demand today, so we're seeing a supply and demand problem and that means salaries are going up."

Dr. Reichardt and Dr. David Schroeder, associate professor of information and decision sciences, have performed an annual salary survey since 1990 for the Institute of Management Accountants. The survey shows average salary and total compensation for internal auditors increased 27 percent and 35 percent (to $102,385 and $121,727, respectively) in 2004.

Dr. Reichardt says increased hiring is being done both by public accounting firms and non-CPA companies.

Public accountants, on the other hand, are losing out. Public accountants had the highest pay in 2003 but dropped to sixth in 2004, as their average salary and total compensation dropped 10.4 percent and 11.2 percent (to $96,209 and $110,465, respectively).

Dr. Reichardt also notes that the survey shows the pay gap between men and women narrowed in 2004, after widening for three years. Female accountants on average made 81.8 percent of what their male counterparts did, the first time women have made more than 80 percent of what men did. The average salary of women in the survey was $78,531, compared to $95,992 for men, while average total compensation was $88,401 for women and $111,485 for men. Yet Dr. Reichardt cautioned it's too early to tell whether that narrowing of the gender gap will continue.

"A few years ago we saw the gap narrow one year but then it kept widening until the 2004 survey," Dr. Reichardt said.

Another bright spot in the gender gap is that in 2004, for the first time in 16 years, women in one age category made more than their male counterparts, with female accountants age 19-29 making 15 percent more than men in that age range.

"This would seem to indicate that the starting salaries for women may be ahead of those for men because this age category would represent those who are beginning their careers in the accounting/financial management field," Dr. Reichardt said.

The survey is available on the Institute of Management Accountant's Web site, www.imanet.org.

Source: Valparaiso University