The rising and unpredictable costs of complying with the Sarbanes-Oxley Act is causing some companies to consider going private to avoid being forced to adhere to the law’s provisions, CFO.com reported.

What some had thought would be one-time costs are turning out to be accelerating costs, according to a study from Foley & Lardner, which found that 21 percent of the companies surveyed are considering going private.

Smaller companies are particularly struggling with compliance with 85 companies with annual revenue below $1 billion (out of the 115 companies that responded to the survey), said the average cost of being a public company increased from $1.24 million before Sarbanes-Oxley to $2.13 million after.

"Not only do the costs associated with corporate governance reform continue to be significant," stressed the study, "but executives surveyed feel these costs are increasingly unpredictable."

The survey found that 60 percent of the respondents are not better able to predict these costs, which is why the number considering going private climbed from 13 percent last year to 21 percent this year.

Section 404 compliance was identified as having the largest financial significance for public companies, followed by legal expenses and D&O insurance, CFO.com reported.

While the costs increase for director fees accelerated last year, nonaudit fees paid to accountants dropped 20 percent from 2002 to 2003. The report said, "We believe this decline is primarily because certain consulting work done in prior years has been shifted away from the accountants because of Sarbanes-Oxley regulations, heightened sensitivity surrounding such work and the divestiture by large accounting firms of their consulting businesses."