Companies that feared enormous increases in Sarbanes-Oxley Act-related audit fees can rest a little easier. The huge jump in fees doesn't seem to be materializing in most cases, USA Today reported.
Financial Executives International (FEI) reported in February that 321 chief financial officers had predicted audit fee increases of up to 35 percent. Instead, based on a USA Today analysis of data from AuditAnalytics.com of the 100 largest Standard & Poor's 500 that have reported in for 2003, the jump in audit fees is more like 19 percent. The 19 percent is a far cry from the 38 percent jump experiences in 2002 and falls far below expected numbers.
Retail giant, The GAP, for instance reported it spent $6,000 less in 2003 on audit fees and audit-related expenses than it did in 2002, USA Today reported. Companies that saw huge increases in audit fees usually attributed them to issues other than Sarbanes-Oxley compliance. These issues include mergers, acquisitions, switching to new auditorsâespecially in the case of companies that had used Arthur Andersen as their auditorâand growth of new business.
Industry watchers say the modest increase in audit fees is a sign that the audit industry is not trying to gouge companies struggling to comply with the sweeping reforms outlined in Sarbanes-Oxley. It also shows that audit companies aren't taking undue advantage of the gap left by Andersen's demise.
Mark Cheffers, CEO of AuditAnalytics.com, told USA Today that fees will creep up as audit firms look to cover themselves in case of a blow-up. "How high should (fees) go? That's the question that can't be answered," he said.