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.
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.