Audit fees could jump 50%
The introduction of the Sarbanes-Oxley Act in the United States could raise audit fees by as much as 50%, with the effect expected to hit the UK by the end of the year.
Link: Raising audit fees will help cash-strapped firms survive
David Anderson, partner at BDO Stoy Hayward and head of its US desk, said the increased workload for auditors caused by the new legislation may force up audit fees.
‘The annual health check that was the audit now needs a much more surgical approach,’ said Anderson.
‘Auditors will now have to report on the internal controls of a company, which is outside the comfort zone of both parties and will raise costs.’
Anderson added that speculation had put the extra cost at as much as 50% but that it was more likely to top out at 30%.
He did, however, say that the nature of the extra work gave a much greater licence for lawyers to get involved in the process, pushing up potential costs for clients.
The Act will directly impact on costs for UK companies listed in the US and also UK subsidiaries of US companies, but Anderson also said that with European legislation moving in a similar direction to Sarbanes-Oxley this effect could be seen on a much larger scale this side of the Atlantic.