Audit-Fee Fall: It's a Matter of Trust

Via CFO Magazine (T/Y Going Concern).

The decline in audit fees since 2007 has been a boon for companies, which have struggled to cut costs for most of that period. But are investors getting the short end of the deal?

Lynn Turner, a former chief accountant at the Securities and Exchange omission, thinks that may be the case. Turner, who sits on the board of a $40 billion retirement investment fund in Colorado, says investor groups get nervous when a company in their portfolio, particularly one that's in hard times, wins a steeply lower fee.

"Our concern is [whether] you're paying your auditor enough to make sure it does a quality audit," Turner said on Tuesday during a panel discussion at the annual CFO Rising West conference in Las Vegas. "We don't view audits as a commodity. We don't want the Wal-Mart audit."

Turner described a lasting distrust among investors of the accuracy of financial statements following the audit failures that contributed to the scandals at Enron and WorldCom in the early 2000s. That lack of confidence has been a significant factor in the overall poor performance of investment markets over the past decade and caused capital to flow away from the United States, he suggested.

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