Unsurprisingly, we are also seeing trends of increasing audit fees in Singapore, especially recently, with inflation on the rise. Under the baseline scenario, global inflation is now predicted to reach 8.7% this year and then fall to 5.3% in 2023. Many central bankers have indicated that inflation will remain structurally higher beyond the short-term. Businesses, from sole-proprietor hair salons and hawkers to multinational companies, are increasing their fees to cope with inflation. Audit firms are no exception.
Audit fee as a percentage of company revenue has been on the rise. Based on data from the International Federation of Accountants (IFAC), audit fees hit an eight-year high in 2020, despite pandemic restrictions and business slowdown. The average audit-fee-to-revenue ratio of companies listed on the Toronto Stock Exchange from 2013 to 2020 was 0.29% but became 0.33% in 2020 alone. United States companies on the Russell 3000 index yielded an even higher jump, from an average ratio of 0.38% over the period 2013 to 2020 to a high 0.44% in 2020.
IFAC’s survey also showed that smaller companies paid comparatively higher fees (as a percentage of revenue) than large- and midcap companies. From 2013 to 2020, the average audit fees of micro-cap companies on Russell 3000 were 0.69% of revenue while the average audit fees of mega-cap companies were 0.06% of revenue.
