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Accounting Changes Main Driver of Audit Fee Spike for Companies

Jan. 15, 2020, 5:17 PM

Major, back-to-back accounting changes meant companies paid more to their external auditors in 2018 compared to a year earlier.

Average audit fees increased by 4.25% between 2017 and 2018, with a majority of companies—66%—pointing at new revenue recognition and lease accounting rules from the Financial Accounting Standards Board as the reason, according to a Wednesday report by a research affiliate of Financial Executives International.

  • FASB’s revenue recognition standard, published as ASC 606 in 2014, overhauled the way companies calculated the top line in their income statements by coming up with a single way for businesses, regardless...
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