Audit costs to rise by up to 50% next year
Audit costs are set to rise by as much as 50% for businesses next year, BDO managing partner Paul Eagland has warned.
Mr Eagland said: “I think we’ll see fee inflation next year … of around 20 per cent,” adding “For certain audits, it could be 50 per cent”.
Partners from other firms have estimated that the work required to carry out an audit has increased by 40% compared with ten years ago - partly due to regulatory pressure from the Financial Reporting Council (FRC) in response to corporate failures, such as Carillion and Regenersis.
Another factor driving up costs is the need to increase staff salaries to retain talent and new hiring. To address the growing manpower need for audits, Deloitte announced in August that it intends to recruit 5,000 new auditors over the next five years.
Deloitte UK audit and assurance managing partner, Paul Stephenson, told The Times: “The effort involved in delivering quality audits has ramped up over the years and we anticipate this will continue.”