SEC filers reported a median increase of 3.4% over the fees they paid to external auditors the previous year, according to a survey by the Financial Executives Research Foundation.
Private companies participating in the survey reported a median rise in audit fees of 2.0% and an average rise of 2.7%. Not-for-profits reported an average rise in audit fees of 1.3%, but the median comparison with the previous year was flat.
The report examines responses from 220 financial executives, plus audit fees as reported by SEC filers of more than 7,000 organisations. Public companies participating in the survey reported a median audit fee increase of 3.1%, slightly lower than the 3.4% reported by the larger pool of SEC filers examined for the report.
Public company survey respondents said the increase in their audit fees was primarily due to an increase in the amount of work related to acquisitions and the review of manual controls resulting from US Public Company Accounting Oversight Board inspections. A majority of private companies (60%) and not-for-profits (65%) that reported increased audit fees attributed the rise to inflation.
Audit fees for SEC filers averaged $1.5 million, with a median audit fee of $402,812. About one-fifth (21%) of SEC filers reported ineffective internal controls over financial reporting.
Private companies participating in the survey paid an average of $254,740 in audit fees, with a median of $70,000. Not-for-profit respondents reported average audit fees of $107,208 and a median of $36,440.
—Ken Tysiac (firstname.lastname@example.org) is a CGMA Magazine editorial director.