"Section 404, in effect, mandates that all publicly held companies institute an internal control program for financial reporting. While the benefits of this act will assist in regaining investor confidence in public companies, the costs can be significant," said Farb. "In fact, we estimate the compliance costs of staying public will increase by as much as $1 million or more annually for many companies."

According to Farb, companies may choose to establish a "404" team in an effort to organization the evaluation and assessment of financial reporting internal controls. This team may plan and oversee the staffing and execution of the company's internal control assessment. Depending on the size and complexity of the company, the "404" team may include senior personnel from operations, the CFO or controller, the CIO, the director of internal audit and an outside "404" specialist.

Farb said there is a benefit to this. The internal control program may result in an increase in productivity and efficiencies in operations, simplifying systems and reducing the likelihood of fraud.

However, the estimated costs associated with being public, including compliance with the Act, could range from $500,000 to in excess of $1 million per year. In addition to the increased auditing fees, legal fees will increase since the Act is a law that carries with it significant fines and/or jail time for non-compliance, noted Farb. In addition, Directors and Officers (D&O) insurance will also rise because of the legal exposure under the Act to management and board members. Coverage, if available, could increase more than 100 percent at a minimum.