Big4Guy

I was going through the archives of the Washington Post yesterday. Carrie Johnson, a washington post writer, wrote an article titled "Higher Audit Fees, More Accountability" sometime in 2005. Carrie argues that how sarbanes oxley compliance audit fees are on the rise for companies. But with rising audit fees on one side, responsibilities of executives, consultants management have also increased many fold. Executives pay more attention to financial data and board members are also taking their work more seriously. Harvey J. Goldschmid, a departing Securities and Exchange Commission member quotes -

"Disclosure is more complete, more timely and more accurate, managers are more serious about their jobs, and boards are more active and questioning."

As per the feedback from other Big 4 firms as well as our firm, we expect that the Sarbanes OXley audit fees may more or less be the same in 2006 for most companies. Most companies were grappling with first time compliance and hence had to be heavily dependent on consultants & auditors leading to high compliance costs & audit fees. Analysts are predicting that SOX audit fees might just come down for some companies once their processes are stablized. All said and done, higher audit fees also means that auditors are better vetting financial statements. Accountability on part of the auditors has increased significantly post Sarbanes Oxley. And I feel that itself is the reason for increase in the audit fees. If companies & stakeholders expect more accountability from the auditors, they should be ready to pay more.

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