AUDIT FEES EDGE UPWARD
Morristown, N.J. -- Public companies paid on average $7.1 million in audit fees, representing an increase of 4.5 percent over last year's audit fees paid, according to a survey of nearly 400 senior executives, by Financial Executives Research Foundation, a research affiliate of Financial Executives International, and Audit Analytics. The survey also found the number of audit hours required for a public audit averaged 17,525, estimated to be an average of $249 per hour.
Public and private companies, as well as nonprofits, saw an overall increase in their audit fees in 2013 over the previous year. Respondents indicated that the increase in their audit fees was primarily due to the review of manual controls resulting from PCAOB inspections, as well as other PCAOB issues. Researchers found that 63 percent of public companies whose audit firm was subject to the PCAOB's oversight review indicated that their audit firm shared the comments they received from the PCAOB. In addition, 60 percent of these respondents were required to change their controls, while 80 percent changed their control documents as a result of the PCAOB requirements or inspection feedback.
In comparison, the total audit fees paid by privately held company respondents in 2013 averaged $174,858, which respondents indicated was 3.7 percent higher than last year. Private company respondents with less than $25 million in annual revenue experienced on average nearly a 12 percent increase in their audit fees from the previous year. The number of audit hours required for a private company averaged 2,927 hours, estimated to be $179 per hour.
Nonprofit organizations paid an average annual audit fee of $73,023 in 2013, representing an increase of 1.5 percent. The majority of private companies (60 percent) and nonprofit organizations (67 percent) attributed the increase to inflation. The survey also found that 57 percent of the public company executives who were polled indicated an increase in the internal cost of compliance with Sarbanes-Oxley Section 404 within the past three years.
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