“FEI members have experienced significant change in the audit process over the past decade. This study reflects the challenges they have faced in containing the cost of the audit,” said Andrej Suskavcevic, CAE, President and CEO of FEI and FERF.
MORRISTOWN, N.J. (PRWEB) January 15, 2020
The Financial Education & Research Foundation (FERF)—the independent non-profit research affiliate of Financial Executives International (FEI)—today released the findings of its annual Audit Fee Survey. The survey was sponsored by Workiva(NYSE:WK), provider of the world’s leading connected reporting and compliance platform.
Capturing trends from the 2019 audit season, FERF’s 2019 Audit Fee Survey Report indicates the growth in average audit fees remains strong. Overall, average audit fees increased 4.25 percent from 2017 to 2018 citing changes in the standards from the Financial Accounting Standards Board (FASB) as the primary driver. Public companies reported more change in the amount of audit work by external auditors pursuant to obtaining an auditor’s report on the financial statements than their private and nonprofit counterparts. Private companies reported a median increase of 8 percent, while nonprofits reported no median increase.
Reasons cited for fee increases in the public sector are in sync with prior years’ reports; leading with the impact of new standards from the FASB at 66 percent, particularly those related to revenue and leases. Other contributing factors include high levels of mergers and acquisition activity at 36 percent and a focus on revenue recognition at 34 percent. The private sector and nonprofits cited inflation and negotiation with the primary auditor as primary reasons. The largest change to audit fee averages by industry was cited by Depository Institutions -- 22.94 percent due to preparation for credit losses
Top Two 10-Year Learnings
Findings over the past 10-years have shown:
- Large discrepancy in the size of fliers. Smaller firms have reported a decrease in audit fees while larger firms have seen increases.
- Companies are paying more per hour. Average hourly audit fees have increased from $216 per hour in 2009 to more than $283 in 2019.
“FEI members have experienced significant change in the audit process over the past decade and this study reflects the challenges they have faced in containing the cost of the audit. The 2019 audit season shows that as accounting change continues, that trend is uninterrupted,” said Andrej Suskavcevic, CAE, President and CEO of Financial Executives International and Financial Education & Research Foundation.
Methodology and Sources
FERF’s 2019 Audit Fee Survey Report examines total fees companies paid to external auditors on auditing and related services in 2018. The report is based on responses from more than 340 financial executives at public companies, private companies and non-profit organizations. In addition, the report also examines audit fees as reported by a larger sample of 6,300 SEC filers.
Audit fee information obtained from SEC filings were provided by idaciti. The survey was sponsored by Workiva. FERF’s 2019 Audit Fee Survey Report can be obtained by visiting the online FERF bookstore at http://www.ferf.org/reports.
Workiva, provider of the world’s leading connected reporting and compliance platform, is used by thousands of enterprises across 180 countries, including more than 75 percent of Fortune 500® companies, and by government agencies. Our customers have linked over five billion data elements to trust their data, reduce risk and save time. For more information about Workiva (NYSE:WK), please visit workiva.com.
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About Financial Education & Research Foundation, Inc.
Financial Education & Research Foundation (FERF) is the non-profit 501(c)(3) research affiliate of Financial Executives International (FEI). FERF researchers identify key financial issues and develop impartial, timely research reports for FEI members and nonmembers alike, in a variety of publication formats. FERF relies primarily on voluntary tax-deductible contributions from corporations and individuals, and publications can be ordered by logging onto https://www.financialexecutives.org/Research.aspx
Financial Executives International (FEI) is the leading advocate for the views of corporate financial management. Its more than 10,000 members hold policy-making positions as chief financial officers, treasurers and controllers at companies from every major industry. FEI enhances member professional development through peer networking, career management services, conferences, research and publications. Members participate in the activities of more than 65 Chapters in the U.S. FEI is located in Morristown, NJ. Visit http://www.financialexecutives.org for more information.