|Audit fees expected to rise 62% this year|
Clients anticipate that audit fees will increase nearly two-thirds in 2021 due to the impact of inflation, COVID-19, acquisitions and divestitures, according to a survey by Gartner. The 62% increase that’s expected may be offset by technology savings, however. Organizations that automate at least 25% of their internal controls paid 27% lower audit fees on average, according to Gartner’s survey of 166 publicly traded and privately held companies. Of the respondents, 81% used a Big Four audit firm. Companies with fewer than 50 controls, and more than 25% of them automated, reported 52% lower audit fees relative to ones with less than 25% of their controls automated. In comparison, companies with 50 to 250, as well as more than 250 controls and more than 25% automated, showed 27% lower audit fees. “With audit fees increasing significantly, finance leaders should take note that organizations with higher levels of internal control automation saw substantially lower external audit fees on average,” said Ashwani Gupta, director in the Gartner Finance practice, in a statement. " Automation of internal controls can play a role in not only reducing financial reporting and audit risks but also audit costs. As organizations invest in internal controls automation it will likely become a prominent argument for audit fee reductions in the future."