Why Are Audit Fees Rising? The Talent Shortage Driving Costs Up
Audit fees are rising primarily because the supply of qualified auditors is shrinking at the same time that audit complexity is growing. Average public company total audit fees hit a record $3.26 million in 2024, a 9% increase over the prior year, according to Ideagen Audit Analytics’ 20-year review of public company filings. Total fees also rose 6.4% in 2023. For private and mid-market companies, the pattern is similar. Fewer experienced auditors competing for the same book of business means firms can charge more and take longer. Understanding the structural forces behind these increases helps finance leaders plan budgets, manage auditor relationships, and make better decisions about when and how to engage.
The CPA Pipeline Is Smaller Than It Looks
The accounting profession has been losing ground in the talent race for more than a decade. According to AICPA reporting published in the Journal of Accountancy, accounting programs awarded 55,152 bachelor’s and master’s degrees in the 2023-2024 academic year, a 6.6% drop from the prior year and a continuation of a multi-year slide. Master’s program completions fell roughly 15% in a single year.
At the same time, new CPA Exam candidates dropped to 28,082 in 2024, down from 42,626 in 2023. That 2023 spike reflected candidates front-running the CPA Evolution exam redesign that launched in January 2024. The 2024 trough reflects how thin the underlying pipeline actually is. The Bureau of Labor Statistics projects about 124,200 openings for accountants and auditors each year, on average, from 2024 through 2034, and current graduation rates are not producing enough candidates to close that gap.
There is a partial bright spot: spring 2025 enrollment in accounting programs reached 266,506 students, a 12.4% increase from the prior year and the strongest reading since 2020. Reform efforts on the licensure side appear to be pulling some students back in. But enrollment today translates to graduates in two to four years, which means auditor capacity in the near term remains constrained.
The Retirement Wave Has Not Finished
Roughly 75% of currently licensed CPAs are within 15 years of retirement age, according to AICPA workforce reporting. The retirement wave has been compounded by broader attrition: an estimated 300,000 accountants and auditors left the profession between 2019 and 2022, about a 17% drop from the 2019 peak. Those figures are industry estimates, not codified statistics, but the direction is well documented. Senior auditors who retire take institutional knowledge and client relationships with them, and replacing that depth takes years, not months.
The result is that audit firms are fielding leaner teams on more complex engagements. When experienced capacity is scarce, scheduling slips, review cycles lengthen, and the hours a client is actually billed tend to rise.
Why Are Audit Fees Rising? Four Structural Drivers
Fee increases are not simply a function of supply and demand for bodies. Four structural forces are compounding the labor shortage and keeping the pressure on.
1. Regulatory Complexity Has Increased
Audit scope has widened over the past several years. PCAOB QC 1000, the new firm-level quality control standard, was adopted in May 2024 and now takes effect December 15, 2026 after the PCAOB postponed the original effective date by one year to give firms more implementation time. Complying with QC 1000 requires firms to build and operate a documented system of quality control at a level of formality many mid-sized firms had not previously maintained. That compliance infrastructure costs money, and the cost is ultimately passed to clients.
FASB’s Disaggregation of Income Statement Expenses standard, ASU 2024-03, is effective for annual reporting periods beginning after December 15, 2026 for public business entities. It requires companies to break out specific expense categories in more detail than current practice. Auditing that additional disclosure layer requires more procedures, more documentation, and more senior-level review time.
2. Internal Control Work Has Grown
Across successive editions of the Financial Education and Research Foundation’s Annual Audit Fee Survey, changes to internal control over financial reporting have ranked as the most frequently cited driver of increased audit effort, ahead of acquisitions, divestitures, and personnel turnover. In the 15th survey, ICFR changes were cited by 43% of respondents. As finance functions modernize, implement new ERP systems, or shift to cloud-based platforms, auditors must re-document and re-test controls rather than carry forward prior-year work. That re-work adds hours regardless of staffing levels.
3. Key Personnel Turnover Multiplies Cost
When an auditor who has worked an engagement for several years leaves, the replacement must rebuild familiarity with the client’s business, its risk profile, its estimates, and its internal controls. FERF’s surveys have consistently ranked key audit team member turnover among the top drivers of fee increases. The same dynamic applies to the client side. Controller or CFO turnover during an engagement extends fieldwork time and often triggers re-scoping conversations.
Finance roles requiring CPA credentials now take an average of 73 days to fill, 41% longer than comparable positions without the credential, according to Talentfoot. That delay affects both audit firms and the client organizations they serve.
4. Technology Investment Has Not Yet Offset Labor Costs at Scale
Automation tools and AI-assisted audit procedures are improving. The FERF 16th Annual Audit Fee Survey, covering the FY2024 audit cycle, found that finance leaders are roughly evenly split on whether AI is already improving audit quality in a measurable way. The same report flagged a growing question from CFOs: if the technology makes audit work faster, where do those savings go? Many firms are still running parallel processes, maintaining traditional documentation alongside newer tools, so technology has added workflow without yet eliminating the labor intensity that drives fees.
Firms that have made deeper investments in source-linked workpapers, continuous monitoring, and machine-assisted sampling, like Modus’s approach to AI-native audit, can move faster through repetitive procedures and redirect senior attention to higher-judgment areas. But those efficiency gains take time to fully propagate across the profession and compress the fee baseline.
How Auditor Capacity Affects Audit Timelines
The fee story and the timeline story are the same story told from different angles. When firms have fewer available auditors, they schedule more engagements into fewer windows. Busy season, historically January through April for calendar-year clients, is now functionally a year-round pressure.
Scheduling Compression
Firms that cannot staff an engagement adequately may push it later in the year, which creates downstream problems for clients who need audited financials for lender covenants, investor reporting, board presentations, or regulatory filings. Companies that previously received draft financial statements in March are now receiving them in May or June. That delay has real economic consequences: it can affect a company’s ability to close a financing round, distribute to investors, or satisfy a debt covenant on time.
Scope Creep and Mid-Engagement Re-Scoping
Understaffed engagements tend to surface issues later in the process. An auditor who is stretched thin may not flag an accounting question early enough to resolve it before it becomes a fieldwork blocker. The result is a longer engagement and a higher fee that was not in the original estimate.
The Audit Relationship Is Under Pressure
FERF’s 2026 survey found a growing gap between what finance leaders pay for audits and the strategic value they believe they receive. That perception gap has practical consequences: it motivates companies to consider switching audit firms, which introduces transition costs and its own set of timeline risks. Auditor transitions typically extend the first-year engagement by weeks, as a new firm performs opening balance procedures and rebuilds documentation from the ground up.
What the Profession Is Doing to Rebuild Capacity
The profession is not sitting still. In May 2025, the AICPA and NASBA approved model legislation adding a new licensure pathway to the Uniform Accountancy Act. Candidates with a bachelor’s degree in accounting (120 semester hours) plus two years of professional experience can now pursue CPA licensure without the additional 30 credit hours previously required under the 150-hour rule. Adoption has moved quickly. Ohio enacted the first such law in January 2025, and by the end of 2025 roughly two dozen states had passed legislation adding an additional pathway, with more than 30 states adopting or advancing similar changes into 2026.
The intent is to lower the opportunity cost of entering the profession. The traditional 150-hour requirement often meant a fifth year of tuition, a significant financial disincentive for candidates who could otherwise start earning. Early enrollment data from 2025 suggests the messaging around reduced barriers is resonating: the 12.4% jump in program enrollment is the most encouraging pipeline signal in several years.
Firms are also investing in offshore and nearshore staffing models, international recruitment, and internal training academies to grow capacity faster than the domestic graduate pipeline allows. These adaptations help, but they take time to translate into client-facing senior capacity, which is the scarcest resource in any audit engagement.
What Finance Leaders Can Do Right Now
If your organization anticipates fee pressure or timeline risk, there are concrete steps that reduce both without compromising audit quality.
Start earlier and communicate proactively. Firms prioritize clients who are organized and responsive. Providing a complete and reconciled trial balance, a clean PBC list, and access to key personnel at the engagement’s outset compresses fieldwork time and reduces the per-hour cost of your engagement.
Stabilize your finance team. Controller or CFO turnover during an audit cycle is one of the top fee-increase triggers identified in the FERF survey. If a leadership transition is unavoidable, brief the audit team early and assign a secondary contact.
Understand what you are paying for. Audit fees are not monolithic. Ask your auditor to break out estimated hours by phase and by level of staff. That visibility helps you spot inefficiencies, have informed conversations about scope, and benchmark against peers using published industry surveys such as the FERF Annual Audit Fee Survey.
Evaluate whether your auditor’s technology investments match your needs. Firms using source-linked, digitally enabled workpapers can often complete procedures faster and provide clients with cleaner evidence trails. If your current engagement involves significant manual document exchange, there may be efficiency gains available through a different workflow or a different provider. Modus’s audit and assurance practice is built on AI-native methods designed to reduce the time burden on client finance teams while maintaining the judgment quality that financial statement users expect.
Frequently Asked Questions
Why are audit fees going up?
Audit fees are rising because the supply of qualified auditors is shrinking while audit complexity is increasing. Fewer accounting graduates, a large wave of CPA retirements, and new regulatory requirements, including PCAOB QC 1000 and expanded FASB disclosure rules, have all increased the cost and time required to complete an audit. Public company audit fees rose an average of 9% in 2024 and 6.4% in 2023.
How much have audit fees increased in recent years?
Average public company total audit fees reached a record $3.26 million in 2024, a 9% increase over the prior year, according to Ideagen Audit Analytics. Total fees rose 6.4% in 2023. For mid-market private companies, the increases are directionally similar, typically in the mid-single to low-double digits annually, though absolute dollar amounts are smaller. The trend is expected to continue as regulatory demands increase and auditor capacity remains tight.
How does the accountant shortage affect audit timelines?
When firms have fewer experienced auditors available, engagements are scheduled further into the year and may run longer than originally planned. Finance roles requiring CPA credentials now take an average of 73 days to fill, and that capacity gap directly affects how quickly firms can staff and complete engagements. Companies that previously received draft financials in the first quarter are increasingly receiving them mid-year.
What is causing the accounting talent shortage?
The shortage has three main causes. First, accounting graduate numbers have declined for several years: programs awarded 55,152 degrees in 2023-2024, a 6.6% drop. Second, a large cohort of Baby Boomer CPAs has reached retirement age, with an estimated 300,000 professionals leaving the field between 2019 and 2022. Third, the traditional 150-hour licensure requirement historically discouraged some candidates by adding tuition cost and time. The AICPA and NASBA addressed the last issue in May 2025 by approving model legislation for an alternative pathway that pairs a 120-hour bachelor’s degree with two years of experience, and most states have since adopted or advanced it.
What can a CFO or controller do to manage rising audit fees?
The most effective levers are starting early, keeping finance team turnover low during the audit cycle, providing organized and complete documentation at fieldwork kick-off, and asking auditors for a detailed breakdown of estimated hours by phase. Working with a firm that uses AI-native audit methods can also reduce the time burden on your team, since machine-assisted procedures handle high-volume, lower-judgment tasks faster than traditional workflows.
Will audit fees continue to rise in 2026 and beyond?
Meaningful fee pressure is likely to continue through at least 2027. PCAOB QC 1000 takes full effect December 15, 2026, requiring firms to build and operate documented quality management systems. FASB’s Disaggregation of Income Statement Expenses standard adds new disclosure and audit requirements for annual periods beginning after December 15, 2026. Both will add procedural scope to audits. Over a longer horizon, the new CPA licensure pathways and growing enrollment could gradually ease the supply constraint, but that relief is years away from being felt in audit pricing.
Filed under: Firm & Profession Trends