Accounting News

Wednesday, June 27, 2012
Cost of Audits Climb

As we near the tenth anniversary of the Sarbanes-Oxley Act there is a new survey on the costs for the auditing of public and private companies. The survey was conducted by Financial Executives International about the costs paid to external auditors.

The Sarbanes-Oxley Act was enacted to try and prevent the type of accounting fraud that was committed at Enron. The concern is that is would cost to much to comply with the new regulations and not provide the protection needed. I won't speak to the second argument but this survey answers the first.

Audit fees continued to rise in 2011. Public companies saw audit costs increase another 5% last year. The increase for private companies was 7%. The average cost to a public company was $3.9 million in audit fees. If required to rotate auditors then the costs would only escalate as new accounting firms are brought in. The Public Company Accounting Oversight Board will be hearing public comment on this change later this week.

Risk remains a big focus for the auditing community. 73% of the respondents to the survey said they had a risk management program in place. This represents a 10% over the responses last year.

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