Public companies paid an average of $4.8 million in total audit fees in fiscal year 2009, according to a survey by Financial Executives International, with the average public companys audit fees decreasing 2.4 percent from the prior year.
However, audit fees for private companies were mostly stable, with an average of $291,200 in 2009, almost identical to the fees they paid in the prior year. FEI noted that the pool of companies polled for the survey changed this year, so they cannot be directly compared to the prior year.
The average man-hours for audits of public companies was 21,458 last year, compared to 2,606 man-hours for private companies. On average, public and private companies gave auditors positive marks across the board, rating them with scores ranging from 3.6 to 4.3, based on a scale of 5 with 5 being very good.
Eighty-eight percent of public company respondents used Big Four audit firms, compared with only 36 percent of private company respondents.
Average audit fees of companies with centralized operations were significantly less than those with decentralized operations, for both public and privately held companies.
The average external auditor hourly rate per hour for public companies was $218, compared to an average hourly rate of $185 for private companies.
Twenty-one of the 197 private companies plan to switch auditors, compared to only 7 of the 150 public company respondents. Service issues and fees were key reasons for both groups. Both public and private companies rated their auditors as neutral to good on seven different criteria: audit efficiency; audit committee and senior management communication; status reporting; global coordination; technical skills; knowledge of your business; and audit administration.
Companies by and large this year are expressing relative ease in the audit process, which is a positive sign, said FEI president and CEO Marie Hollein in a statement. We have seen past respondents predict that the fees would stabilize, and the new pool of companies surveyed are showing that this is beginning to happen for them. Companies were also generally satisfied with the job of their auditors in 2009 and are maintaining longer and stronger relationships with their firm. We believe this is crucial - as the internal finance staffs continue to take on new responsibilities.
Most large accelerated filers list their shares on the NYSE Euronext Stock Exchange, while most of the smaller publicly held companies list their shares on NASDAQ.
Of the 150 public companies responding to the survey, only 16 (10.7 percent) indicated that their auditors broke out the cost of the Sarbanes-Oxley Section 404 attestation.
