Survey: Audit Fees Rose for Public and Private Companies in 2012

By Jason Bramwell
 
According to more than 220 finance leaders who participated in a new survey by Financial Executives International (FEI), audit fees paid by public companies in 2012 averaged $4.5 million, a 4 percent increase over their prior fiscal year audit, while private company audit fees averaged $147,800, an increase of 3 percent over the previous fiscal year. 
 
Reasons attributed to the increase in audit fees for public companies include acquisitions and the perception that Public Company Accounting Oversight Board (PCAOB) inspections of audit firms have led to an increase in audit work, the FEI Audit Fee Survey 2013 reports. 
 
Private companies attributed acquisitions (39 percent) and inflation (30 percent) as the top reasons for the increase in audit fees.
 
The number of audit hours required for public companies in 2012 averaged 16,737, while private companies required an average of 1,769 audit hours.
 
Similar to previous years, the average audit fees of companies with centralized operations  both public and private  were found to be significantly less than those with decentralized operations. On average, public companies with centralized operations paid $3.7 million for their annual financial statement audits, while those with decentralized operations paid $4.6 million.
 

Other Key Survey Findings

  • In terms of auditing firms, a greater percentage of public company respondents (87 percent) continue to use Big Four audit firms than did either private company respondents (29 percent) or not-for-profit organizations (38 percent).
  • Private company respondents believe public company standards have influenced their private company audit. When asked about the extent they believe public company standards have influenced their audit, nearly all respondents expressed some degree of influence, with more than one-quarter (29 percent) stating they were significantly influenced.
  • When public companies were asked about their compliance costs related to Section 404 of the Sarbanes-Oxley Act over the past three years, 39 percent of accelerated filers and 27 percent of large accelerated filers reported their compliance costs had increased.
 
Private companies with centralized operations on average paid $103,500 for their annual financial statement audits; those with decentralized options paid $354,600.
 
"We continue to believe that the audit of the financial statements of a company with centralized operations is more efficient than that of a company with decentralized operations, and this year's survey results demonstrate that this still holds true," Marie Hollein, president and CEO of FEI and its research affiliate, the Financial Executives Research Foundation (FERF), said in a written statement. "The survey results indicate the importance of FEI's role in monitoring and responding to standard-setting developments with regard to any potential impact on our members and their companies."
 
Survey results are free for FEI members, and nonmembers can purchase the survey results for $249 by visiting the FERF bookstore online. Detailed figures for audit fees will become available online through AuditFeeCheck, FEI's search tool. Responses can be searched based on all criteria, including industry, company type, and company size.
 
AccountingWEB Readers  Join the Discussion:
  • Did your company pay more in audit fees in 2012 than the previous fiscal year? If so, what factors do you think contributed to that increase in fees?
Please share your thoughts in the comments section below.
 
About the survey:
The FEI Audit Fee Survey 2013, which is conducted annually by FERF, the research affiliate of FEI, polled more than 220 financial executives representing US publicly held companies (of which 91 percent were accelerated filers with total market capitalizations of more than $75 million), privately-held companies, and not-for-profit organizations to examine the total fees companies paid to external auditors in 2012, as well as a number of issues related to the auditing process.

You may like these other stories...

Regulatory compliance, risk management and cost-cutting are the big heartburn issues for finance execs in the C-suite. Yet financial planning and analysis—a key antacid—is insufficient.That's just one of the...
A review of Financial Accounting Standards Board (FASB) guidance on share-based payment transactions found that the 2004 standard achieves its purpose and provides useful information to investors and other users of financial...
An examination initiative launched by the US Securities and Exchange Commission (SEC) earlier this week will enable the agency to evaluate whether municipal advisors are complying with new SEC rules that went into effect...

Already a member? log in here.

Upcoming CPE Webinars

Aug 26
This webcast will include discussions of recently issued, commonly-applicable Accounting Standards Updates for non-public, non-governmental entities.
Aug 28
Excel spreadsheets are often akin to the American Wild West, where users can input anything they want into any worksheet cell. Excel's Data Validation feature allows you to restrict user inputs to selected choices, but there are many nuances to the feature that often trip users up.
Sep 9
In this session we'll discuss the types of technologies and their uses in a small accounting firm office.
Sep 11
This webcast will include discussions of commonly-applicable Clarified Auditing Standards for audits of non-public, non-governmental entities.