Despite a slight dip during the COVID pandemic, the average audit fees paid by SEC registrants have more than tripled over the course of the past 20 years, according to a new analysis (available for download).
The report from Audit Analytics covers the period from 2003 to 2022 and shows the average audit fees paid rose from $681,000 to $2,243,000. Total fees — including tax and other fees — also rose significantly, from $1,128,000 to $2,703,000 over the same period.
However, the universe of reporting companies actually decreased, from 10,101 in 2003 to 7,279 in 2022.
The report attributes much of the growth in fees to the increased complexity of audits due to regulatory developments like the release of major new standards around revenue recognition and leasing.
It also cited the SPAC (special purpose acquisition companies) boom in 2020 and 2021 — which generally have lower audit fees — as a possible reason for the dip in fees in those years.
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
The report introduction notes audit fees paid to external auditors can be an indicator of audit complexity. “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,” the report authors wrote.
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.