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Survey Says: Audit Fees Were Up Almost Five Percent in 2022, In-Person Audit Work Is Back

illustration representing an audit

The Financial Education & Research Foundation (FERF) has released the findings of its 14th Annual Public Company Audit Fee Study, sponsored by Center for Audit Quality. The FERF 2022 Public Company Audit Fee Study Report examines audit fees companies paid to external auditors for auditing and related services for the period between June 2022 and May 2023. The report is based on responses from 54 financial executives at public companies and an additional survey of 116 audit engagement partners. In addition, the report also examines audit fees as reported by nearly 7,060 SEC filers. The CAQ also contributed to the report by conducting a survey of audit engagement partners.

Here’s what you need to know.

Average audit fees increased by 4.6 percent from 2021 to 2022

Of more than 6,200 clients, the average audit fee works out to $2.4 million (sauce).

Less than half — 47 percent — of member company respondents said they’ve had to increase their efforts to support the external audit, 51 percent said there’s been no change. Acquisitions are a big driver for increased effort, 21 percent of respondents credited it for the stepped up effort. That or changes to ICFR and divestitures.

Technology is doing a lot of heavy lifting in audit

Much like last year’s survey, 89 percent of preparers said their auditors are using advanced data and information analysis. Almost 80 percent of audit partners surveyed said they used data analytics and/or other emerging technologies in 2022 audits, that’s a five percent increase from prior year. On the client side, 64 percent of preparer respondents said they think the use of these technologies improved audit quality compared to 49 percent of them a year ago.

But AI Isn’t Big…Yet

36 percent of preparers surveyed said they plan to incorporate use of AI into their financial reporting within the next five years.

Musty audit rooms are back!

Better put that deodorant order on subscription, in-person auditing is definitely back.

More than 55 percent of audit partners surveyed say they expect their team will spend more than half of their time together, be that at the client site or at the firm’s office. The number of partners with this expectation has more than doubled from last year, less than 25 percent of audit partners surveyed for 2021 had this same expectation.

On the client side, 43 percent of preparer respondents expect their finance and accounting teams to spend 50 percent or more of their time together on-site supporting the audit during peak times. That’s an even bigger jump from less than 15 percent of them having this expectation last year.

More from CFO Magazine, including averages for large accelerated filers and much smaller filers, here: Audit Fees Rose Nearly 5% in 2022: Weekly Stat