Publicly traded companies saw their audit fees rise less than 3% last year but they’re working to keep an even tighter lid on fees this year. Public companies paid an average of $3.7 million to their outside auditors in 2008, up just 2.2% from the previous year’s total, according to a survey of 360 public and private companies conducted by Financial Executives International (FEI). The private companies surveyed, which were generally smaller than the public companies, paid average audit fees of $219,500, up 3.7% from 2007. The public company audits on average required 9,881 hours of auditors’ time last year, while audits of private companies took 1,903 hours.
Executives from public companies are optimistic about the outlook for this year’s audit costs: Just 19.4% expect their audit fees to rise, while 80.6% expect them to come in unchanged or lower, with almost a third predicting audit fees will decline by between 2% and 10%. About two-thirds of the executives say they’re bargaining hard with their outside audit firm, while 54.5% say they’re doing more of the work themselves, 9.1% say they’ve switched to a regional audit firm and 8.2% are putting the audit out for bid.
Private companies are less upbeat about this year’s costs. About half of them expect audit fees to increase between 2% and 10%, while 40.4% believe fees will be little changed. And that’s despite their efforts to tame costs, which in some cases exceed those of public companies. Almost 23% of private companies have put their audit out for competitive bids, versus just 8.2% of the public companies, and 20.4% have switched to smaller audit firms, more than double the portion of public companies that have done so.
Marie Hollein, FEI CEO and president, says the greater stability in public company audit fees reflects public companies’ five years of Sarbanes-Oxley work, which has helped them streamline their audit processes. She also noted public companies’ long-standing relationships with their auditors.