Public companies saw the fees they paid to their outside audit firms rise 5% last year, to an average of $3.9 million, according to an annual survey conducted by Financial Executives Research Foundation. Private companies saw a 7% rise in 2011 audit fees, to an average of $231,200.
The modest increase in public companies’ audit fees in 2011 follows a 2% rise, to $3.3 million, in 2010.
FERF surveyed more than 270 companies. The public company results varied by size, with the 17 public companies that had revenues greater than $25 billion reporting a 10% rise in their audit fees, while the 13 public companies with revenues between $5 billion and $14.9 billion saw their fees decline by 9%.
When respondents were asked to explain the change in their audit fees last year, the two most popular responses were to cite either increased work by their internal audit staff or their finance staff, suggesting that fees might have increased more without the additional work that was done in-house.
The survey shows that on average, public companies have had the same audit firm for 20 years, while private companies’ relationships with their auditors have lasted an average of eight years.
Asked their view of the Public Company Accounting Oversight Board’s proposal for mandatory rotation of outside audit firms, 95% of public companies and 85% of private companies said they did not support the proposal.
Bill Sinnett, senior director of research at FERF, notes that the survey shows companies with centralized operations pay audit fees that are “significantly less” than those paid by companies with decentralized operations. For example, while the average audit fee for public companies was $3.9 million, public companies with centralized operations paid $2.2 million in fees while public companies with decentralized operations paid $5.6 million.
See a write-up of last year's audit fee survey here.