FERF’S 2018 Audit Fee Survey Indicates Divergence in Public, Private and Non-Profit Business Sector Experiences
Fee Increases Nearly Double for Public Companies While Private Companies Begin to See Reductions and Non-Profits Remain Flat
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:
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.
Read the full Report here.
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