The debate about corporate governance is starting to bite – the cost of obtaining an audit is on the rise.
A study has revealed that audit fees paid by Australia's biggest companies have soared by an average 27 per cent over the past year. According to the study, average audit fees paid by the top 100 companies rose to $1.87 million in 2002 compared with $1.47 million the year before.
Figures compiled by research and advisory firm Institutional Analysis show that audit fees were fairly static from 1992 to 2000, with the average fee hovering between $1 million and $1.4 million.
But at the other end of the scale, non-audit fees were skyrocketing. From 1992 to 2001, the average non-audit fee paid by top 100 companies increased by 230 per cent. The situation, however, was reversed after the gaggle of high-profile collapses and scandals led by Enron.
The study shows that the most rapid growth for non-audit fees occurred from 1996 to 2000. During this period, the average non-audit fee grew from $1.1 million to $3.1 million, a rise of 180 per cent.
But the survey showed there has been a marked change as public concern about auditor independence grew, as Federal Parliamentary inquiries into the profession were launched and as overseas regulators started taking action to limit the range of non-audit services being offered by auditors.
The size of the average non-audit fee paid relative to the average fee paid dropped substantially. In 2002, the average non-audit fee fell 26 per cent to $2.2 million. This was the biggest decline yearly decline in the 10 years covered by the study.