Companies saw a slight increase in their audit fees in 2008, but public companies fared better than private, according to the latest survey data from Financial Executives Research Foundation

On average, publicly held companies paid $3.7 million in total audit fees in 2008 for a 2.2 percent increase over 2007 fees. That figure represents audit work both for financial statements and internal control over financial reporting, reflecting the recent change in audit practices to integrate the two audits under Auditing Standard No. 5. By comparison, private companies paid an average of $219,500 for audit services, an increase of 3.7 percent over the prior year.

The average public company paid $216 an hour for 9,881 hours of audit services in 2008, with accelerated filers paying on average $21 more per hour than non-accelerated filers. The average private company, on the other hand, required 1,903 hours at a rate of $179 per hour.

Private companies generally reflected a lower level of satisfaction with their audit work, with nearly one-fourth of all private companies seeking a new audit firm by putting the audit work out for bid. Of those, 20 percent are working with a regional or local firm instead of a national or international firm, but only 10 percent of public companies had audit firms in that category. Where companies were unhappy with their current auditors, they most often cited service issues as their chief concerns.

Marie Hollein, president and CEO of Financial Executives International, said public companies are getting better at managing internal controls over financial reporting, reducing the level of audit activity generally, and they’re putting more automated controls into place. Both of those factors are helping to keep audit costs in check compared with prior years and compared with private companies.

“Private companies sometimes have more decentralized operations,” she said, which drives more audit work. “And private companies tend to have smaller audit firms,” which typically charge lower rates.