Company audit fees rose by a median 3.2 percent in 2015, according to a new study.
The Annual Audit Fee Survey by the Financial Executives Research Foundation, the research affiliate of Financial Executives International, also found that audit fees trends are diverging among companies of different sizes and types.
While the median audit fee increase was 3.2 percent, public company audit fees rose 1.6 percent, while private company fees rose 2.9 percent. Fees for non-accelerated files rose the most, at 4.8 percent, while smaller reporting companies rose 2.3 percent.
Over the past four years, large accelerated filers have managed to keep their fee increases to a minimum, the study suggests, “by focusing more intently on audit preparedness, improving internal controls, negotiating with auditors, and other initiatives.”
Among the survey’s other findings:
- The average audit fee paid in 2015 by the 6,490 unique filers reporting in 2014 and 2015 was $1.8 million, with a median of $522,205.
- Audit fees decreased for over 1,100 filers.
- Almost one-fifth of Securities and Exchange Commission filers reported ineffective internal controls.
- For those with ineffective internal controls, the median increase in audit fees was 5.1 percent.
WHY THEY RISE
For the 89 public companies that responded to the FERF survey, the average audit fees paid were $6.5 million, while for the 126 privately held companies surveyed, fees averaged $258,935. Acquisitions were the most common cause of audit fee increases for public companies, while inflation was the most common cause at private companies.
The survey included 30 nonprofits; their average audit fees in 2015 were $159,844, and inflation was the most commonly cited cause of fee increases.
The full results of the survey are free for FEI members; non-members can purchase them for $49.95 at the FERF bookstore online.