Companies paid a bit more in audit fees in fiscal year 2008 compared to the previous year, according to a new survey.
Financial Executives Internationals Financial Executives Research Foundation found that publicly held companies paid an average of $3.7 million in total audit fees in fiscal 2008, a 2.2 percent increase over the total audit fees paid in fiscal 2007. Public company audits averaged approximately 9,881 hours in 2008.
Privately held companies paid on average $219,500 in total audit fees for fiscal 2008, a 3.7 percent increase over the total audit fees they paid for fiscal 2007. Private company audits averaged about 1,903 hours.
For public companies, the blended audit fee rate per hour averaged $216 ($196 for non-accelerated filers and $217 for the accelerated filers). For private companies, the blended audit fee rate per hour averaged $179 ($152 for the smallest companies to $230 for the largest).
About 23 percent of the private companies surveyed have solicited competitive bids for their audit work, and 20 percent said that they moved to a regional or local firm, compared to less than 10 percent of public companies.
However, 86 percent of public company respondents used the Big Four audit firms, compared with only 38 percent of private company respondents.
Eighty-one percent of public company respondents expect audit fees to remain relatively flat or decrease. Fifty percent of private company respondents expect to see audit fees increase 2 percent to 10 percent next year, while 40 percent expect audit fees to hold relatively flat.
A majority of companies negotiated hard with their external auditors (68 percent of public companies and 56 percent of private) and have taken on more of the work internally (55 percent of public versus 51.4 percent of private).
Similar to previous years, the survey found that respondents from both public and private companies with centralized operations had lower total costs of compliance in 2008 than did those with decentralized operations. Public companies with centralized operations paid $3.2 million for their annual financial statement audits, while those with decentralized operations paid $4.5 million. Private companies with centralized operations paid about $180,000 for their annual financial statement audits, while those with decentralized operations paid over $244,000.
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