'02 Law Driving Costs of Auditing

by Luke Jones  on Monday, Sep. 19, 2011 12:00 am  


Government regulations aren't the only reason audit costs can fluctuate. Windstream, for example, paid out $600,000 more in 2010 audit fees than it did in 2009.

"Typically, when you see fluctuation specific to Windstream, it's acquisition-related or capital-markets work," CFO Tony Thomas said. "When we go to bond and refinance our debt, it requires us to file registration statements with the SEC and drives up incremental work on [the auditors'] part."

Acxiom Inc. of Little Rock's bill went up $700,000 in fiscal 2011, and the company identified an audit of its employee benefit plans as the source of the additional cost.

Home BancShares Inc. of Conway cited $177,000 of its auditing fee as coming from acquiring four failed Florida banks last year.

A few companies also changed firms in the last fiscal year. Tyson, as mentioned, parted with Ernst & Young and switched to PwC. First Federal BancShares of Arkansas Inc. in Harrison switched from Big Four firm Deloitte & Touche LLP to BKD LLP, currently Arkansas' largest firm. ThermoEnergy Corp., which has been moving its management from Little Rock to Rochester, N.Y., dropped Kemp & Co. and picked up CCR LLP.

The companies, in their annual proxy statements, made sure to point out these changes weren't made over disputes with the auditors.

"A lot of times, when you see that 'no disagreement' message, it means it was an economic decision, or there was something about the client that's changed, or the client needed a different auditor to serve them appropriately," the UA's Peters said. "But it could always be the case that there was something like a fallout between the client and auditor."

In First Federal's report, for example, Deloitte & Touche, in its parting remarks, noted "uncertainty about [First Federal's] ability to continue as a growing concern."

Earlier this year, First Federal underwent a $46.3 million recapitalization by Bear State Financial Holdings LLC. The ailing Harrison bank posted losses of $46.2 million in 2009 and $4.9 million in 2010.



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