Ideagen Audit Analytics has released “A Twenty-Year Review of Audit Fees,” an in-depth look at audit fee trends from 2002 to 2022 and there are some fun charts inside. Mainly we care about this one:
In FY2003, average audit fees were $681,000; in FY2022, this number was $2,243,000.
A few more factoids:
- The average audit fees paid by SEC registrants reached an all-time high in FY2022 at $2,242,980—representing an 11% increase from FY2021
- Average total fees paid grew nearly 10% in FY2022 to $2,702,922, the highest amount seen over the 20-year period.
- Total audit fees reached nearly $16.8 billion in FY 2022, increasing 0.6% from FY2021
- Audit fees paid to Big 4 firms account for 92% of all audit fees for SEC registrants paid in FY2022
- Together, the average amount that SEC registrants paid for non-audit services increased in FY2022, reaching $459,942—representing a 3% increase
from FY2021
Says the intro, audit fees paid to external auditors can be an indicator of audit complexity.
The intro also says:
Over the past 20 years, significant activity in the regulatory markets, both in the US and internationally, has affected audit fee and nonaudit fee trends. Accounting standards ASC 606 Revenue from Contracts with Customers, ASC 842 Leases, and ASC 326 Financial Instruments – Credit Losses required companies to change existing accounting and financial reporting standards. These new regulations likely contributed to rising audit fees in prior years. Accounting standards that became effective for entities post-FY2021 are refinements, with some new guidance for specific sub-topics under Business Combinations, Leases, and Earnings per Share. In response to these changes, auditors are required to implement new procedures to determine if the companies’ new policies adequately meet the standards.
Increases in audit complexity resulted in additional effort from external auditors. Higher-risk audits require more auditor resources (hours, personnel, specialists, etc.) to reduce audit risk to an acceptable level.
Ah, so now we begin to understand why there’s less “busy season” and more “just busy.”
Fewer companies disclose audit fees paid to external auditors compared to the peak in 2006 when 10,912 companies did so. In 2022, only 7,279 companies disclosed how much they’re paying for audits. God bless Ideagen Audit Analytics.
Who took home the most in audit fees in 2022? That’s what we’re all here for right? PwC. Followed by EY, Deloitte, and then KPMG predictably coming in fourth.
| Rank | Firm | Audit fees in millions |
|---|---|---|
| 1 | PwC | $4,664.9 |
| 2 | EY | $4,272.2 |
| 3 | Deloitte | $3,809.1 |
| 4 | KPMG | $2,737.9 |
| 5 | Grant Thornton | $309.5 |
| 6 | BDO USA | $242.4 |
| 7 | Marcum | $126.9 |
| 8 | RSM | $95.4 |
| 9 | Crowe | $63.4 |
| 10 | Moss Adams | $49.1 |
There’s a bunch of other stuff in the report like a breakdown of audit fees by industry (Transportation & Communication is highest, Agriculture lowest), quite a bit on Marcum’s favorite topic SPACs, US versus foreign filers, and even auditor ranking by audit fees per million of client revenue (EisnerAmper takes #1 there). You can snag the full report from IAA here.