The audit Fee is the cost of services paid by the company to external auditors. This information is usually disclosed in the notes to the financial statements or sections corporate governance. This article explains how to find, read, and interpret the audit fee and its range of values in Indonesia.
For investors, academics, and auditors, information about audit fee this is an important part of financial transparency.
The cost of the audit reflects the level of complexity of the report, the professionalism of the auditor, to the independence between the auditor and the client.
However, many readers of financial statements do not know where and how to find the audit fee figures. This article will explain the practical steps to recognize such posts as well as the context in which they are disclosed.
What is an Audit Fee and why should it be disclosed?
Audit Fee is the fee paid by the company to the external auditor for the annual financial statement audit services.
Purpose of disclosure:
- Give transparency regarding professional fees.
- Shows auditor independence against clients.
- Meet regulatory provisions, such as OJK and IDX for public issuers.
According to the Professional Standards of Public Accountants (SPAP), each audit fee must:
“it is established reasonably, reflects the complexity of the work, and does not affect the objectivity of the auditor.”
How to see Audit fees in financial statements
1. Open the Annual Report or audited Financial Statements
The document is available on the official website of the company on the menu Investor Relations The annual report or Annual Report.
2. Find the section titled “Notes to Financial Statements.”
Audit Fee is usually recorded in the post General and administrative expenses, Professional Load, or External Audit Services.
Serving example:
“The cost of external audit services for 2024 amounted to Rp 2,450,000,000 paid to KAP XYZ.”
3. Check the Corporate Governance Report (GCG Report)
Some issuers also display the name of the auditor and the value of the audit contract explicitly in the governance section.
4. Use The Search Feature (Ctrl + F)
Type keywords like ”audit", "KAP”, or "professional services” on PDF reports to find related sections quickly.
5. Compare Between Years
Seeing the trend of increasing or decreasing audit fees can provide insight into changes in business complexity or company policy.
Note: not all companies are required to publish nominal figures in detail, but public issuers are encouraged to disclose them for the sake of principle full disclosure.
Where Is The Audit Fee Disclosed?
Usually found on:
| Disclosure Location | Information Content |
|---|---|
| Notes to financial statements | The value of the audit fee in the heading” professional services “or”external audit expenses". |
| Consolidated Report | Total audit costs of the parent and subsidiaries. |
| Corporate Governance Report | KAP name, assignment period, and contract value. |
| Annual Report Ringkas | External auditor summary and cost range. |
How Are Audit Costs Calculated?
Although not described in detail in the report, KAP internal calculations generally follow the following formula:
Audit Fee = (Audit hours) × (Auditor hourly rate) + operating costs + cap Margin
Main Calculation Factors
- Number of working hours auditor dan level tim (junior, senior, partner).
- Report complexity and audit risk.
- Company size and number of subsidiaries.
- Quality of internal control.
- Auditor reputation (KAP lokal vs Big Four).
The larger the company or the higher the risk, the greater the audit fee charged.
How much is the Audit Fee in Indonesia?
Based on the annual report of IDX issuers:
- Medium-sized companies: Rp 300 million-Rp 2 billion per year.
- Large / multinational companies: Rp 3 billion-Rp 10 billion per year.
- Finance and energy sector it usually has the highest cost due to more complex risks and regulations.
Auditor of Big Four (PwC, EY, Deloitte, KPMG) set higher rates than national KAP due to reputation and global audit coverage.
Why do investors and researchers need to pay attention to Audit fees?
- Transparency Indicator - Demonstrate the company's commitment to cost transparency and governance.
- Risk Indicators - An audit Fee that is too low can indicate that the audit was carried out in a hurry; too high can lead to auditor dependence.
- Academic Research Data - Used to analyze the relationship between company size, audit quality, and auditor independence.
The challenge of Fee Audit transparency in Indonesia
- Not all companies disclose the nominal in detail.
- Some combine the audit fee with consulting services, complicating the analysis.
- Differences in standards between industries make data not always consistent.
- An active role of OJK and IAI is needed to encourage more uniform disclosure.
Real (Illustrative)Example
The annual report of PT ABC Tbk 2024:
“The cost of external audit services for the current year amounted to Rp 4,250,000,000 paid to KAP DEF & partners. An Auditor is appointed to examine the Consolidated Financial Statements of PT ABC Tbk and its subsidiaries.”
From this note, the reader can see who the external auditor is, the audit period, and the value of the contract.
Conclusion
Knowing how to see audit fees in financial statements helps to understand the transparency and efficiency of the company.
This information is usually found in the notes to the Financial Statements, Consolidated Statements, or corporate governance statements.
Clearly disclosed audit fees indicate the implementation of good corporate governance principles and strengthen investor confidence in the integrity of financial statements.
Closing
To learn more about the audit fee, the calculation process, and the relationship with audit quality, visit the main page Audithink's Comprehensive Features.
If your organization needs audit consulting, empirical research, or guidance on Financial Reporting Transparency, please contact Audithink team to get a professional and scalable solution.
