top of page
  • Writer's pictureDaniel Goelzer

Survey Finds that Audit Fees are Expected to Rise in 2021

According to the results of a survey conducted by research and advisory firm Gartner, Inc., respondents expect external audit fees to increase this year. Gartner also found that organizations that automate at least 25 percent of their internal controls paid 27 percent lower audit fees on average in 2020 and that fee negotiation is an effective tactic in mitigating fee increases. Gartner’s survey results are described in a June 8 press release; the full survey results are available only to Gartner clients.

Gartner surveyed 166 publicly traded and privately held audit firm clients in a variety of industries during March and April of 2021. Survey respondents ranged from organizations with revenue over $10 billion to those with revenue under $500 million. Eighty-one percent of respondents employed a “big four” audit firm.

In addition to the fee survey, Gartner analyzed a subset of 124 of the respondents to determine the impact of internal control automation on audit fees. According to the June 8 press release, that analysis found:

  • The 80 companies in the analysis subset that had less than 25 percent of their controls automated paid on average $1,233,143 in audit fees. The 44 companies that had more than 25 percent of their controls automated paid $900,513 in fees – 27 percent less.

  • 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.

The Gartner survey also looked at 2020 audit fee increases. Findings include:

  • 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.

The Financial Executives Research Foundation’s annual survey of audit fee increases has generally found that fees have increased on average by low- to mid-single digit percentages in recent years. See FERF Finds that Audit Fees Continue Their Upward March, May-June 2021 Update. Against that background, it would not be surprising if Covid-19 and general inflationary pressures lead to higher fees in 2021. Audit committees may want to consider Gartner’s findings regarding the efficacy of both control automation and fee negotiation as tools to control fee increases.

96 views0 comments

Recent Posts

See All

PCAOB Reworks the Foundations of Auditing

The Public Company Accounting Oversight Board has adopted a new auditing standard, AS 1000, General Responsibilities of the Auditor in Conducting an Audit, and related amendments to other auditing sta


bottom of page