Audit Fees and Non-Audit Fees: A Twelve Year Trend

Audit Analytics released its annual Audit Fee report yesterday. Titled “Audit Fees and Non-audit Fees: A Twelve Year Trend”, the report is available free to subscribers or for purchase to non-subscribers.

Overall, the research showed that for 2013 the ratio of non-audit fees over revenue was the lowest for the twelve years under review, while the audit fees over revenue experienced a 1.4% uptick.

Highlights from the report:

Non Audit Fees as Compared to Audit Fees:
In 2002, non-audit fees represented 51% of the total fees paid by research population of accelerated filers, but after three years of steady decline non-audit fees appear to have leveled off at about 21% of total fees.

Audit Fees 2013 Update

Non-Audit Fees as a Percentage of Revenue:
During 2002, the cost of non-audit fees paid by the research population for every million dollars in revenue was $386. The data shows a steep decline, leveling off and then gradual decline between 2003 and 2012, with the 2013 figure the lowest value calculated for the twelve years under review: $126 for every million dollars in revenue.

Audit Fees as a Percentage of Revenue:
The ratio of audit fees over revenue peaked in 2004 when the average amount of audit fees paid per $1 million of revenue was $592. After four consecutive years of decline the figure increased slightly in 2009, but this uptick was due to a decrease in revenues instead of an increase in fees. After another three years of decline, 2012 reflected a cost of $472 per $1 million of revenue, the lowest value since 2004 (since the implementation of SOX 404). A slight increase of 1.4% in 2013 brought the figure to $479 per $1 million of revenue.

Audit Fees and SOX 404:
Average audit fees for the 2,323 Accelerated Filers included in this analysis increased from $2.6 million in 2004 ($6.039B / 2323) to $3.5 million in 2013 ($8.096B / 2323). The increase in average audit fees corresponds to an increase in the number of Accelerated Filers obtaining and audit of their internal controls over financial reporting. In 2004, about 62% of the 2,323 Accelerated Filers obtained an auditor attestation regarding their controls. By 2013, over 99% of Accelerated Filers obtained an attestation.

Audit Fees and 404_2014

Subscribers may download the Audit Fee Report by logging into Audit Analytics and going to the Custom Reports section of the site.