Fees for external audits of financial statements paid by US public and private companies rose in fiscal year 2012 over the previous year, according to a new survey report.
Audit fees paid by 87 public companies averaged $4.5 million in FY 2012, according to a Financial Executives International (FEI) report. That represented a 4% increase over the audit fees those same companies paid in the previous fiscal year.
Private companies paid an average of $147,800 in total audit fees in FY 2012, an increase of 3% over their FY 2011 audit fees. Executives from 118 private companies participated in the survey.
It was the third straight year of fee increases reported by public companies in the annual survey, which previously showed increases of 5% in FY 2011 and 2% in FY 2010 after a fee decrease was reported in FY 2009.
Private companies saw fees rise 7% in FY 2011, and reported that their year-over-year audit fees remained essentially unchanged in FY 2010 and FY 2009.
Public company respondents most commonly said audit fees increased for their companies because of additional audit work required related to corporate acquisitions, and the perception that US Public Company Accounting Oversight Board inspections of audit firms have led to rising audit fees. Private company executives cited corporate acquisitions and inflation as reasons for the rise in their audit fees.
Centralised operations correlated with lower audit fees for both public and private companies in the survey. Public companies with centralised operations paid an average of $3.7 million for their audits, compared with $4.6 million for their counterparts with decentralised operations.
Private companies with centralised operations paid an average of $103,500 for their audits, while fees for public companies with decentralised operations averaged $354,600 in audit fees.
“We continue to believe that the audit of the financial statements of a company with centralised operations is more efficient than that of a company with decentralised operations, and this year’s survey results demonstrate that this still holds true,” FEI President and Chief Executive Marie Hollein said in a news release.
The average number of audit hours required for public company audits was 16,737. Private companies reported an average of 1,769 hours required for their audits.
—Ken Tysiac (email@example.com) is a CGMA Magazine senior editor.