Both public and private companies saw an increase in the auditing fees they paid to outside firms, according to a new survey by Financial Executives International.

The survey polled more than 220 financial executives from U.S. public and private companies and nonprofit organizations. The audit fees paid by the 87 publicly traded companies responding to the survey for fiscal year 2012 averaged $4.5 million, an increase of 4 percent from the audit fees they paid for their prior fiscal-year audit. Of those executives polled, 91 percent were accelerated filers with total market capitalizations of more than $75 million.

In contrast, the total audit fees paid by the 118 privately held companies responding to the survey averaged $147,800, an increase of 3 percent over their prior-year audit.

Audit fees paid by the 16 nonprofit respondents averaged $265,400. On average, nonprofit respondents indicated that their audit fees for 2012 were only one percent greater than for 2011, though average fees by size of company ranged from flat to an increase of 3 percent.

The number of audit hours required for the responding public companies averaged 16,737. Reasons attributed to the increase of audit hours include acquisitions and the perception that Public Company Accounting Oversight Board inspections of audit firms have led to an increase in audit work, according to the survey.

The hours required for private companies averaged 1,769. Privately held companies attributed acquisitions (39 percent) and inflation (30 percent) as the main reasons for the change in audit fees. 

The average audit fees of companies with centralized operations were significantly less than those with decentralized operations, for both public and privately-held companies. 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, and privately-held companies with decentralized operations 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,” said Marie Hollein, president and CEO of Financial Executives International and the Financial Executives Research Foundation, in a 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.”

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).

While companies on average this year experienced only minor increases in audit fees from the previous reporting year, they continue to face a number of challenges beyond costs, the FEI Audit Fee Survey found. Public companies remain focused on mitigating financial risk, while private companies are beginning to feel the influence of public company standards.

Survey respondents from privately held company said they 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 a quarter (29 percent) stating that they were significantly influenced.

When public companies were asked about their Section 404 compliance costs over the past three years, 39 percent of accelerated filers and 27 percent of large accelerated filers reported that their compliance costs had increased.

Survey results are free for FEI members, and nonmembers can purchase the survey results for $249 by visiting the FERF bookstore online at www.ferf.org/bookstore. 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. AuditFeeCheck is available on the FEI Web site.