Top 500 audit fees rise 14% to almost £1.3bn

The value of audit fees paid by the UK’s 500 biggest businesses has risen 14% over the last 12 months from £1.12bn to £1.27bn, according to research from Thomson Reuters.

The increase in the cost of audit work is due in part to growing regulatory pressure to improve the robustness of audits.

Last year, the Financial Reporting Council (FRC) issued fines totalling £33.3m a 77% increase from £18.7m in 2020/21.

Thomson Reuters also stated that negative publicity surrounding high-profile corporate failures have led to audit firms increasing the time spent on audit work and subjecting audit cases to more intensive review.

Another factor behind the increase in fees is the skills shortages that the audit profession
has faced.

To attract new recruits and retain existing staff, audit firms have been forced to increase salaries, having a knock-on impact on audit fees.

Kyle Gibbons, managing director, Europe, for Confirmation at Thomson Reuters said:
“Auditors have invested heavily in recent years into delivering high quality audits. This has
inevitably put upward pressure on audit fees. However, the risks of coming under regulatory
scrutiny means executing audit work to the highest standard is absolutely crucial.

“Better use of technology will not only facilitate regulatory compliance by reducing the risk of errors being made, but also increase efficiency throughout the audit process.”

Kathryn Cearns, former chair of the Office for Tax Simplification and of the ICAEW Financial
Reporting Committee, added: “There is a lot of focus on audit quality and that’s putting
pressure on auditors to up their game. There is also a scarcity of talent, which is putting
pressure on audit fees. Auditors are looking for help with these challenges and Thomson
Reuters Cloud Audit Suite can support them with meeting the needs of their clients on audit
quality, while also doing it efficiently.”