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  • Daniel Goelzer

Compared to Canada and Europe, in the U.S. the Cost of an Audit is High and Going Up

Updated: May 29

On April 25, the International Federation of Accountants (IFAC) published Audit Fees Survey 2022: Understanding Audit and Non-Audit Service Fees, 2013-2020. The study provides data on the audit and non-audit fees paid by U.S., Canadian, and European exchange-listed companies of all sizes in nine industries. IFAC finds that, as a percentage of company revenue, audit fees in the U.S. are substantially higher, and rising more rapidly, than in Canada or Europe. However, across the markets IFAC studied, fees paid for non-audit services are stable or declining.


Audit Fees


Audit fees, as a percent of revenue, were almost three times higher in the U.S. than in Europe. U.S. fees were 33 percent higher than in Canada.

  • For U.S. companies in the Russell 3000 index with average revenues over $10 million, the average audit fee as a percentage of revenue rose from 0.39 percent in 2018 and 2019 to 0.44 percent in 2020. In 2013, the first year studied, the average audit fee was 0.35 percent of revenue.

  • In contrast, for Canadian companies on the Toronto Stock Exchange with revenue over $10 million in Canadian dollars, average audit fees rose from 0.30 percent in 2017, 2018 and 2019 to 0.33 percent of revenue in 2020.

  • For European companies listed on the major European exchanges with revenue in excess of €10 million, average audit fees in 2020 were 0.15 percent of revenue, up from 0.11 percent in 2013 and 0.13 percent in 2015-2019.

During the period 2013-2020, IFAC found significant differences in audit fees for companies based on location of headquarters, industry, and company size:

  • On a state-by-state basis, California was the most expensive jurisdiction for a Russell 3000 company audit (on average, audit fees were 0.68 percent of revenue). North Dakota was the cheapest (0.10 percent of revenue).

  • U.S. Manufacturing sector companies paid the highest fees in the western world as a percentage of revenue – slightly in excess of 0.50 percent. Among U.S. companies, firms in the Retail Trade, Wholesale Trade, and Construction sectors paid the lowest fees; approximately 0.10 percent of revenue. Worldwide, European retailers had the lowest percentage-of-revenue fees.

  • Smaller companies paid higher fees (as a percentage of revenue) than large- and mid-cap companies. This was true in the U.S., Canada, and Europe. In the U.S., micro-cap companies (companies with market capitalizations of less than $300 million) paid about 0.70 percent of revenue in audit fees. At the other end of the spectrum, mega-cap companies (companies in the top five percent by market capitalization) paid roughly 0.06 percent of revenue for their audit.

Non-Audit Fees


IFAC also studied fees paid to the financial statement auditor for tax-related and other non-audit professional services. In contrast to audit fees, the study found a flat or declining trend in total non-audit service fees across all markets. (Total non-audit service fees include audit related services, tax related services, and other non-audit services.)

  • For U.S. companies in the Russell 3000 index with revenues over $10 million, average total non-audit service fees as a percentage of revenue rose slightly from 0.057 percent in 2019 to 0.062 percent in 2020. The average between 2013 and 2020 was 0.061 percent. In 2013, the first year studied, the average total non-audit service fee was 0.069 percent of revenue.

  • For Canadian companies on the Toronto Stock Exchange with revenue over $10 million Canadian dollars, average total non-audit service fees rose from 0.100 percent in 2019 to 0.110 percent of revenue in 2020. Both years were however below the 2013-2020 average of 0.121 percent.

  • For European companies listed on the major European exchanges with revenue in excess of €10 million, average total non-audit service fees in 2020 were 0.032 percent of revenue, down from 0.037 percent in 2019 and from 0.053 percent in 2013-2020.

Comment: For U.S. companies, IFAC’s headline finding seems to differ somewhat from that of Audit Analytics. While IFAC reports a 2020 fee increase, AA found that, in 2020, audit fees paid by U.S. public companies declined for the first time since 2010. See Audit Fees Declined, But Don’t Get Used to It, January-February 2022 Update. The difference appears to stem from the fact that AA focuses on the dollar amount of aggregate and average audit fees for all U.S. public companies, while IFAC concentrates on audit fees as a percentage of revenue for the Russell 3000. As noted in Audit Fees Declined, But Don’t Get Used to It, AA also found that, for reporting companies of all types, audit fees per million dollars of revenue increased seven percent between 2019 and 2020. AA attributes that increase to revenue declines, rather than audit fee increases.


Audit committees that want to benchmark trends in their audit and non-audit fees against industry peers may find both the AA and IFAC studies useful data points. Of course, audit fees will also be influenced by factors unique to the company, such as the sophistication of controls and systems and the presence or absence of unusual or non-recurring events and transactions. The level of non-audit fees, on the other hand, is driven primarily by discretionary decisions regarding whether to retain the auditor for permissible non-audit services.

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