MORRISTOWN, N.J.--(BUSINESS WIRE)--Financial Executives Research Foundation (FERF), the independent, non-profit research affiliate of Financial Executives International (FEI), the association of choice for CFOs and other senior-level financial executives, today released the findings of its annual Audit Fee Survey.
The report examines total fees companies paid to external auditors in 2014 and several additional services related to the auditing process, based on responses from 220 financial executives. In addition, the report also examines audit fees as reported by the larger pool of SEC filers of more than 7,000 organizations.
Key findings include:
- SEC filers paid an average of $1.5 million, with a median audit fee of $402,812. This represents a median increase of 3.4 percent over last year’s audit fees paid.
- A total of 20.6 percent of SEC filers reported ineffective internal controls over financial reporting.
- The median increase in audit fees for SEC filers that reported ineffective internal controls over financial reporting were 3.0 percentage points higher than the median for all SEC filers, and 4.6 percentage points higher than the U.S. Average Producer Price Index for Services.
- Public companies responding to the FERF survey experienced a median increase of 3.1 percent, compared to a 3.4 percent increase experienced by the pool of SEC filers.
- Public company survey respondents indicated that the increase in their audit fees was primarily due to acquisitions and the review of manual controls resulting from PCAOB inspections.
Fifty-seven percent of public companies responding to the survey whose audit firms were subjected to the PCAOB’s oversight review indicated that their audit firm shared the comments they received from the PCAOB. In addition, 45.3 percent of respondents were required to change their controls as a result of PCAOB requirements or findings. However, none of the survey respondents indicated that the PCAOB inspections resulted in a restatement of financial statements.
“Audit fees are an important metric for members and our detailed analysis reveals critical information they can use in controlling costs,” said Andrej Suskavcevic, President and CEO of Financial Executives International and Financial Executives Research Foundation. “FERF is dedicated to providing this type of thoughtful and thorough research that offers a unique perspective for financial executives.”
Private companies surveyed paid an average of $254,740 total audit fees in 2014, with a median of $70,000. This represents an average increase of 2.7 percent over the prior year, with the median increase at 2.0 percent. Private company respondents with less than $5 million in annual revenue experienced an average audit fee increase of nearly 11.2 percent over the prior year, with a median increase of 6.7 percent. The number of audit hours required for a private company averaged 2,800 hours, with a median of 850.
Non-profit organizations paid an average annual audit fee of $107,208 in 2014, representing an average increase of 1.3 percent, while the median of $36,440 in 2014 remained flat. The majority of private companies (60%) and non-profit organizations (65%) attributed the increase to inflation.
Other key findings from the public company survey responses include:
- A majority of public companies indicated that the volume of annual audit work by external auditors in 2014 has increased compared to 2013, in order to obtain both an auditor’s report on the financial statements (69.3 percent) and an auditor’s report on internal controls (63.2 percent).
- Over half of respondents, or 58.7 percent, indicated an increase in the internal cost of compliance with Sarbanes-Oxley Section 404 within the past three years. However, almost half (or 45.3 percent) saw an improvement to their internal controls and were satisfied with the additional expense.
The survey was sponsored by Workiva. MyLogIQ provided data for analysis. Survey results are free for FEI members, and nonmembers can purchase the results for $49.95 by visiting the online FERF bookstore at www.ferf.org/reports.
About Financial Executives Research Foundation, Inc.
Financial Executives 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 www.ferf.org/reports.
Financial Executives International 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 74 chapters in the U.S. and a chapter in Japan. FEI is headquartered in Morristown, NJ, with a Government Affairs office in Washington, D.C. Visit www.financialexecutives.org for more information.
Workiva (NYSE:WK) created Wdesk, a cloud-based productivity platform for enterprises to collect, link, report, and analyze business data with control and accountability. Thousands of organizations, including over 65% of the Fortune 500, use Wdesk for risk, compliance, or management reporting. Wdesk proprietary word processing, spreadsheet, and presentation applications are integrated and built upon a data management engine offering synchronized data, controlled collaboration, granular permissions, and a full audit trail. Wdesk helps to mitigate enterprise risk, improve productivity, and give users confidence to make decisions with real-time data. Workiva employs more than 950 people with offices in 15 cities. The company is headquartered in Ames, Iowa. For more information, visit www.workiva.com.