Study: Big Four Fees Grow with Tenure

By:
Chris Gaetano
Published Date:
May 24, 2018
Cash

A recent study has found that audit fees from Big Four firms grow the longer they're with a client, according to Accounting Today. On average, these firms increased their fees by 13 percent between the first and second year with a client, then an additional 22 percent between the second and third year, and then 28 percent above the original fee after 12 years, and then finally 32 percent by the 14th year. This is despite the fact that the longer an auditor spends with a client, the easier it becomes to audit the company. The study found that the amount of time between the end of the fiscal year and the issuance of the audit report declined by 6 percent between the first and third year, 10 percent by the fifth year, 14 percent by the sixth year and 16 percent by the ninth year. “Big Four audit firms charge a sizable tenure-linked fee premium [even as] less audit effort is needed,” the study reported. In contrast, the study found that audit firms other than the Big Four charged either flat fees over time, or even decreased the fees the longer their tenure went on.  

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