The last year has seen financial departments focus heavily on improving audit management and control strategies through smarter use of human resources and technology.
MORRISTOWN, N.J. (PRWEB) December 11, 2018
- Fee Increases Nearly Double for Public Companies While Private Companies Begin to See Reductions and Non-Profits Remain Flat
- New Standards and Inflation Stand as Key Contributors to Fee Increases
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 Report. The survey was sponsored by Workiva (NYSE:WK), a leader in data collaboration, reporting and compliance solutions.
Capturing trends from the 2017 audit season, FERF’s 2018 Audit Fee Survey Report indicates the growth in average public company audit fees nearly doubled. Private company audit fees showed a modest decrease and non-profit organization fees remained flat.
Public companies reported a median increase of 2.5 percent, compared with 1.3 percent in 2016. Private companies reported a median increase of 3.2 percent, compared with 3.7 percent for 2016 audits. Non-profit respondents 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 Financial Accounting Standards Board (FASB), particularly those related to revenue and leases. Other contributing factors include high levels of mergers and acquisition activity as well as detailed documentation requests responding to Public Company Accounting Oversight Board (PCAOB) inspection reports and staff alerts.
Despite added demands on companies and organizations, respondents suggest audit complexity in and of itself did not exceed reasonable expectations.
For the private and non-profit sectors, mitigating audit fee increases was largely attributed to:
- A competitive audit services marketplace.
- Extensive planning and information preparation prior to an audit’s start.
- Increased collaboration between companies and auditors throughout the year, such as proposed transaction reviews to identify implications or requests for more detailed audit plans and scoping documents.
- Negotiating with auditors about rates, allocated hours, and audit assistance by way of conducting low-risk audit tasks in-house.
In larger companies and organizations, automation is also having an effect. Automating account reconciliation and data transfers between finance systems, for example, is expected to increase operating efficiency and enhance the finance team’s overall contributions to the broader organization. Notably, while respondents acknowledge that implementing such automation tools and processes may increase audit-related costs in the near-term, the initiative is expected to reduce costs over time.
“The last year has seen financial departments focus heavily on improving audit management and control strategies through smarter use of human resources and technology. Inevitably, complying to new standards and oversight requirements brings new responsibilities and, in some cases, additional work and related fees,” said Andrej Suskavcevic, CAE, President and CEO of Financial Executives International and Financial Education & Research Foundation.
Methodology and Sources
FERF’s 2018 Audit Fee Survey Report examines total fees companies paid to external auditors on auditing and related services in 2017. The report is based on responses from over 250 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 has been provided by idaciti. The survey was sponsored by Workiva. FERF’s 2018 Audit Fee Survey Report can be obtained by visiting the online FERF bookstore at http://www.ferf.org/reports.
Workiva delivers Wdesk, a leading enterprise cloud platform for data collaboration, reporting and compliance that is used by thousands of organizations worldwide, including over 75 percent of the Fortune 500®. Companies of all sizes, state and local governments and educational institutions use Wdesk to help mitigate risk, improve productivity and gain confidence in their data-driven decisions. 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.