A recent Gartner survey of 166 public & private companies found that 62% expect audit fees to increase this year. The survey also found that companies that automate at least a quarter of their internal controls paid 27% lower audit fees on average, and that companies have some success in keeping fees down through negotiation.
Dan Goelzer’s latest newsletter provides a nice summary of all the findings. Here are a few takeaways:
– Companies in the banking and insurance sectors had the highest percentage of fee increases – 69 percent of those respondents reported increases. The technology/telecom sector had the lowest percentage of fee increases – 41 percent of respondents in that sector reported increases in 2020.
– Of the companies in all industries that reported fee increases, 22 percent reported increases of 6 percent or more, compared to 2019.
– Companies that sought to negotiate fees with their auditor were frequently rewarded. Gartner reports that, of the respondents that undertook negotiation, 45 percent said their fees decreased by more than 6 percent, while half were able to decrease their fees by 3 to 6 percent.
– Companies with fewer controls were the greatest beneficiaries of automation. Respondents with less than 50 controls, and more than 25 percent of those controls automated, reported 52 percent lower audit fees, compared to companies with less than 25 percent of automated controls.
Dan says that other surveys also indicate that fees could jump this year – so audit committees may want to look at internal control automation & fee negotiation as cost-control tools.
– Liz Dunshee