As auditor independence faces heightened scrutiny, the largest accounting firms are focusing more on their core business.
According to an analysis by the Investor Responsibility Research Center, audit fees now account for an average of about 58 percent of total fees charged by accounting firms. Fees for non-audit services account for the other 42 percent in 2004 — compared with about 55 percent in 2003 and 72 percent in 2002, according to the IRRC.
The IRRC based its 2004 figures on the 1,652 companies that have completed their 2004 annual meetings. The center pointed out that the disclosure rules defining what constitutes audit and non-audit fees changed during 2003, which may slightly affect the comparisons.
The IRRC noted that the average fees (including both audit and non-audit services) charged by BDO Seidman, Deloitte & Touche, Ernst & Young, Grant Thornton, KPMG, and PricewaterhouseCoopers totaled $3.31 million for these companies during the 2004 proxy season. The average amount charged by PricewaterhouseCoopers, however, was $4.31 million — $1 million more than the average for all companies.
In addition to audit fees, the IRRC report found that tax fees accounted for 22.7 percent of the total charged by the firms, audit-related fees accounted for 14.8 percent, and a variety of other fees accounted for the remainder.