Rising audit costs of the past few years have not yet leveled off, based on the latest data on audit fees, with companies reporting a 9.16-percent rise in audit costs from 2014 to 2015.
In the newest report on audit fees and non-audit fees from Audit Analytics, analysis through 2015 shows companies saw another increase in their external audit costs in 2015. Expressed as a factor of revenue, audit fees in 2015 for accelerated filers rose to $529 per million of revenue compared with $486 per million in revenue in 2014. And that figure was up from $475 per million in 2013 and $463 per million in 2012.
Audit Analytics also provides data on audit fees that include costs for related audit work that is not specific to the audit of financial statements or internal control over financial reporting. That data suggests a similar rise in audit costs in 2015. Companies paid $599 per million in audit and audit-related costs in 2015, rising from $549 per million in 2014 and $537 per million in 2013.
“We’re seeing a steady but not steep increase in audit fees,” says Don Whalen, director of research at Audit Analytics. “We’re seeing not seen large increases, but steady increases.”
The newest data also shows that accelerated filers paid more in non-audit fees to their external audit firms in 2015. Companies paid $149 per million to their financial statement audit firm for services other than the audit in 2015, up from $136 per million in 2014 and $129 per million in 2013.
In a separate analysis, Audit Analytics also calls out audit cost increases for companies that got an adverse opinion from auditors in the state of internal control over financial reporting in the prior year. That analysis shows companies pay significantly more to external auditors in the subsequent year following that adverse finding.
The research looks at the effect on audit fees of adverse internal control findings in 2013. In that year, companies with adverse opinions paid $733 per million in revenue for the external audit, and that figure jumped to $1,013 per million in revenue the following year. It tapered somewhat to $920 per million in 2015, but that’s still substantially higher than the fees paid by all accelerated filers in the same period.
Whalen says the data also shows those companies with adverse opinions paid less in external audit fees and non-audit fees in the years leading up to the adverse opinion. “It makes me wonder if that was a situation where it came back to bite them later on,” he says.