Question Number: 67
PDR Number: SBE067
Date Submitted: 14/11/2022
Department or Body: Australian Securities and Investment Commission
Setting audit fees is a commercial decision by companies and their auditors. ASIC is not a pricing regulator. The fee setting process is managed by directors and the audit committees with their auditors and can vary from year to year based on a range of factors. Information Sheet 196 Audit Quality – The role of directors and audit committees (https://asic.gov.au/regulatory-resources/financial-reporting-and-audit/auditors/audit-qualitythe-role-of-directors-and-audit-committees/) includes guidance for directors and audit committees when setting audit fees. Information Sheet 183 – Directors and Financial Reporting (https://asic.gov.au/regulatoryresources/financial-reporting-and-audit/directors-and-financial-reporting) also says that companies must pay reasonable fees to the auditor and should ensure that the fees are adequate and do not have the potential to adversely affect the quality of the audit. In addition, ASIC’s recent audit inspection reports – second last paragraph on page 23 of Report 743 Audit inspection report: 1 July 2021 to 30 June 2022 (https://asic.gov.au/regulatory-resources/find-a-document/reports/rep-743-audit-inspectionreport-1-july-2021-to-30-june-2022/) and first paragraph on page 23 of Report 709 Audit inspection report: 1 July 2020 to 30 June 2021 (https://asic.gov.au/regulatory-resources/finda-document/reports/rep-709-audit-inspection-report-1-july-2020-to-30-june-2021/) urge directors and audit committees to ensure audit fees are set at a level that supports the audit work required.