Can Fee Disclosure Be Trusted?

In an effort to improve the transparency of the client-auditor relationship, the Securities and Exchange Commission since 2001 has required firms to disclose the fees they pay to their external auditors for audit and non-audit services. To determine the consistency of fee disclosures, 31 external au...

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Bibliographic Details
Published in:Regulation (Washington. 1977) 2005-12, Vol.28 (4), p.46
Main Authors: Skantz, Terrance, Dickins, Denise
Format: Article
Language:English
Subjects:
Accounting
Audit committees
Auditors
Bias
Disclosure
Nonaudit services
Polls & surveys
Professional fees
Proxy statements
SEC regulations
Stockholders
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Summary:In an effort to improve the transparency of the client-auditor relationship, the Securities and Exchange Commission since 2001 has required firms to disclose the fees they pay to their external auditors for audit and non-audit services. To determine the consistency of fee disclosures, 31 external auditors (partners and managers) who regularly participate in the fee disclosure preparedness process were surveyed. For a sample of fee disclosures by 501 companies, the Audit Fee for 2002 as reported under the original three-category scheme was compared to Audit Fee for 2002 as reported under the newer four-category scheme. It was found that 37% of firms increased the amount disclosed as Audit Fees paid in 2002; the average increase was approximately $151,000, or 18%. Only 7% of firms decreased the amount in the Audit Fee category, by approximately 5%.
ISSN:0147-0590
1931-0668