AI begins to slow the rise in companies’ audit fees

In short: Audit fees are rising more slowly, and companies are starting to push for lower prices as more audit work is done with AI.

What's going on

Audit bills usually go up by about 4% to 5% a year. But last year, companies’ audit fees increased by less than 2%, which is broadly in line with inflation.

Several things are influencing prices. Tighter rules and past audit scandals led accounting firms to spend more on controls and processes, and many passed those costs on to clients. Over the five years to 2023, the top 100 London-listed companies saw audit fees rise 75%.

Audit work also changes with what companies are doing. When firms buy, sell, or expand businesses, audits can take more time. For example, AstraZeneca paid $34 million in audit and related fees last year, up more than 6%. On the other hand, when companies shrink or sell units, there is less to check. Sainsbury’s paid about a quarter less after disposing of its banking unit, and Diageo paid 15% less. The Financial Times also notes that about a third of FTSE 350 companies paid less for audits last year.

A bigger pressure is growing expectations around AI. Clients want audit prices to fall if software is doing more of the routine work (like using a calculator that can scan many pages at once). Even KPMG argued for a lower bill from its own auditor, citing AI-driven savings.

What to watch

Accounting firms say savings may not show up quickly. They still need people reviewing results, and they may run new AI systems alongside old tools while they build confidence. But the long-term direction is clearer: more price pressure, and more billing based on outcomes instead of hours.

Source: Financial Times