Polling nearly 250 executives who represent both U.S. publicly held companies and private companies, along with some non-profit organizations and foreign companies, the survey found that publicly held companies paid an average $3.3 million in total audit fees for fiscal 2010, an increase of 2% from the audit fees that these same respondents paid for the prior fiscal year audit.
Private company respondents reported an average fee of $222,300 in 2010, essentially the same amount that they paid for audits in the previous year. The average public company was billed for about 12,540 hours of audit work in 2010. Audits for private companies averaged about 3,394 hours.
"Public and private companies are continuing to demonstrate overall comfort with the external audit process, and we see the fact that there are no particular surprises in fees and hours as a strong indicator of their understanding and solid relationships with their auditor," said FEI President and CEO Marie Hollein.
Overall, financial executives cited internal audit staff work, and changes in company operations as some of their primary reasons for the difference in fees.
Among both public and private companies, the average audit fees of those with centralized operations were significantly less than those with decentralized operations, as was also true in previous years. On average, public companies with centralized operations paid $2.9 million for their annual financial statement audits, while those with decentralized operations paid $5.3 million.
In terms of what companies did the audits, Big 4 firms continued to dominate the public-company market last year. Among those companies, 83% used a Big 4 firm. As for private companies, the Big 4 was used 34% of the time.
Among public companies, Ernst & Young was the most frequently used auditor (25%), followed by KPMG (20%), Deloitte (19%) and PriceWaterhouseCoopers (17%.)
The results for privately held companies were more spread out, with 11% using PWC for audits last year, followed by Ernst & Young at 10% and Grant Thornton at 9%.
Auditor tenure seemed to register as somewhat proportional to the size of the company. While the weighted average auditor tenure for public companies was 21 years, companies with more than $25 billion in revenues reported keeping the same auditor an average of 50 years, and the smallest companies in the survey -- with revenues of less than $25 million -- had auditors with tenure of less than 10 years.
Asked how often companies put their audit engagements out for bid, a clear majority of companies in the survey reported doing so only when they decided to switch auditors. This was more pronounced (89%) for accelerated companies -- those with more than $700 million in revenues -- while 57% of U.S. non-accelerated filers put audits out for bid only when deciding to switch. Some 60% of private companies gave this answer.
The 62% of public companies reporting centralized operations paid an average $2.9 million for their annual financial statement audits, while those with decentralized operations paid $5.3 million.