More evidence that accountants have been the big winners from Sarbanes-Oxley. At the expense of smaller companies.

Costs of being a public company have dropped since 2004 but most of these savings have been wiped out by increases in audit fees, D&O insurance and board compensation, according to a new study by Chicago-based law firm Foley & Lardner.

Average audit fees have continued to rise for large and small companies. But the increases were disproportionately skewed to the smaller companies.

For S&P 500 companies, they were up 4 per cent and for mid-caps, they rose six per cent. But they soared 22 per cent for small-cap companies.

It gets better.

Between 2003 and 2005, average audit fees rose 62 per cent for the biggest 500 companies and 104 per cent for S&P mid-caps. But for S&P small-caps, they were up by a massive 141 per cent.

Significantly, the study also found that one in three (34 per cent) were not confident of able to predict costs associated corporate governance reforms, and one-thid said Sarbanes-Oxley had forced them to cut budgets, or staff.

No doubt, the study will be used by critics of the Securities and Exchange Commission who have wanted it to exempt smaller companies.