TheCorporateCounsel.net

August 17, 2012

Study: Ten Years of Audit Fees

As noted in this study posted in our “Audit Fees” Practice Area, Audit Analytics found that for 2011 the ratio of non-audit fees over revenue was the lowest calculated for the ten years analyzed and the same ratio of audit fees was the lowest since 2004. Here is a summary of Audit Analytics’ findings:

Non Audit Fees as Compared to Audit Fees: In 2002, non-audit fees represented 51% of the total fees paid by research population, but after three years of steady decline non-audit fees appear to have leveled off at about 20% of total fees. To some extent, the drop in non-audit fees as compared to audit fees is attributable to the Auditor Independence Rules adopted by the SEC in 2001, which precluded the principal independent accountant from performing certain non-audit services to ensure auditor independence when performing the independent audit.

Non-Audit Fees as a Percentage of Revenue: After six consecutive years of decreases in the cost of non-audit fees as a percentage of their revenue, accelerated filers experienced a slight uptick in 2009, but the uptick was due to a decrease in revenues instead of an increase in fees. After the 2009 uptick, both 2010 and 2011 experienced decreases. The 2011 figure was the lowest value calculated for the ten years under review: $121 of non-audit fees for every million dollars in revenue.

Audit Fees as a Percentage of Revenue: The ratio of audit fees over revenue peaked in 2005, when the average amount of audit fees paid per $1 million of revenue was $597. After three consecutive years of decline the figure increased slightly in 2009, but as with non-audit fees, the uptick is due to a decrease in revenues instead of an increase in fees. Both 2010 and 2011 experienced decreases and during 2011 experienced the lowest value since 2004: $466 of audit fees for every million dollars in revenue. The fees declined despite the extra work demanded of the auditors during the same period when more and more companies were required to obtain auditor attestations pursuant to SOX 404(b).

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– FINRA Proposes Corporate Financing Rule Changes for Deferred Comp Arrangements
– Study: Securities Class Action Filings Involving Accounting Allegations Increase
– Chamber of Commerce Goes After Glass Lewis
– FINRA Rule 2111 Becomes Effective July 9th
– Tips for SEC’s New Confidential Submission Process

The Second Deal Cube Tourney: Round One; 3rd Match

As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:

Bobblehead of Each Deal Participant
Better’n Eggs Carton
Telescope
Top of Palm Tree

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– Broc Romanek