For months on end, accountant Jose Carrera and five of his colleagues arrived at their clients' Los Angeles offices just after dawn to settle into a long day of auditing that often stretched to 10 p.m. or later.


"It was non-stop," said Carrera, a partner at Singer Lewak Greenbaum & Goldstein LLP. "We were in the trenches, sometimes doing 17- to 20-hour days, often on Saturdays. I lost a lot of hair."


Call it too much of a good thing.


Carrera and his group are among the legions of accountants across Los Angeles and the U.S. that have been kept busy day and night from work sparked by the federal Sarbanes-Oxley Act.


Even as of last week, there were numerous filings from public companies indicating that earnings results would be delayed and possibly restated for a variety of reasons, ranging from changes in the way leases are accounted for to wholesale auditing overhauls.


The law requires companies to beef up their internal accounting procedures and then have those procedures reviewed by outside auditors. That outside audit cannot be performed by the same accounting firm that provides a company's regular quarterly and annual audits or assists in developing internal controls.


Such closer attention has led to an estimated $30-billion boom in the accounting industry that has fattened partner profits, but also has strained firms that find they can't hire enough help.


The first onslaught of work began last summer, after the SEC released its final guidance on Section 404, which requires that corporate executives and their auditors document and certify to investors that their internal financial controls are sound. Large public companies began analyzing, fixing, testing and retesting their internal financial controls, prior to the outside audits.


"All this had to be done while the companies were preparing their year-end financial reports, and because the changes had to be in place before the year end, we had to finish the work by about Dec. 15," Carrera said.


Carrera and his group assisted three large companies in developing internal controls. Later, other CPA firms went on to audit the results. (Carrera and other accountants interviewed agreed to discuss their work only if their clients would not be identified.)


It wasn't just the long hours and intensity of work that got to him. It also meant intruding on another company while it still had to function, often leading to discord.


The accounting group had to frequently interrupt employees who had various financial responsibilities such as signing checks, handling invoices or keeping track of inventory by interviewing them about their work. "Then we had to write that up, and go back and interview them again to make sure it was accurate. Oh yes, it led to friction," he said.


Carrera remembers routinely spending Saturdays at one client's office. "We lived at the client for about eight weeks. We became like the furniture," he said. "Fortunately for us, there was a Wyndham hotel up the street. Some of our people live in Irvine and Oxnard, so they just slept there and came back the next day."


With one client, the intensity was multiplied by the firm's procrastination in getting started. The company, with a market capitalization of $200 million, didn't engage Singer Lewak until late August. And with only six employees, it lacked many of the required separations of financial responsibilities. Sarbanes-Oxley requires that one person can not perform all financial activities.


"Two of our larger clients came out smelling like a rose, but this one, we had to tell management they had material weaknesses and they didn't act quick enough to reform that," he said. "It was supposed to publish its 10-K a while ago and it still hasn't."


Accountant Randy Valen was responsible for conducting external audits to verify that clients' internal reports were accurate. Many of those audits had to be completed by March 31, with the deadline depending on a company's fiscal year-end.


"In my worst week, we did two all-nighters," said Valen, who oversees PricewaterhouseCoopers LLP's Southern California assurance services, which did Section 404 audits for 107 locally based public companies 65 of which were completed between January and March.


"We got there in the morning, worked all day and through the night because we had to present documentation to the CFO the next morning. We never went home. In my 25 years doing this work, I've never seen anything like this," Valen said.


The long days cut into Valen's personal time. He skipped his usual outing to Lake Tahoe this year with his wife and children. Then the March 31 deadline for large companies with Dec. 31 fiscal year-ends was moved up to March 15.


"Clearly, people got frustrated. They were asking, 'What was the value of all this time and money? What are we even getting out of this, just because of a few bad apples?' We had a couple clients that decided they didn't need to be public companies anymore and are going private," he said.


Valen also became concerned that some of the new accountants hired for Section 404 auditing would leave the profession entirely. "I had to convince the younger guys that it wasn't always like this," he said.


Ramping up
Like most large accounting firms, PricewaterhouseCoopers started preparing for the crunch as far back as 2003. The firm hired more auditors, increasing its staff in Los Angeles and Orange counties from 425 to 650. About a year ago, it stopped taking on new clients.


Each of the firm's regional hubs assigned two senior partners to work full-time on the law, including following SEC updates, getting training material out to audit personnel and keeping the client companies informed on the deadlines and guidelines, which shifted several times.


"We had update conference calls every week to get us ready for the Section 404 work," Valen said.


The firm still had to wait until late August for the SEC to issue its final guidance before companies could begin the work of examining and repairing internal company controls all of which had to be completed before Valen's group began their external audits.


To relieve the stress, Valen began rotating auditors for Saturday work, and declared one day a week "family night," when auditors were sent home early, about 7 p.m.


And when the lion's share of the auditing work was finally done, several hundred PricewaterhouseCoopers accountants went out for pizza and beer on March 31 to celebrate. Valen also arranged for many auditors to get an additional week of summer vacation.


For Carrera, there's been some relief as well, but already smaller companies are seeing their own end-of-year deadlines approaching. He is worried about the extra work that procrastinators will generate.


"Lots of the small companies, when they heard about the extension, said, 'We don't want to start working on that now,' even though we urged them to start early," he said.

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