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 auditors and team levels (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.
FAQ About How to Find Fee Audit
What is fee audit and why must it be disclosed?
Fee An audit fee is the cost a company pays to its external auditor for examining the annual financial statements. Disclosing it provides transparency about professional costs, demonstrates the auditor's independence from the client, and meets regulatory requirements such as those of the OJK and the Indonesia Stock Exchange for listed issuers.
Where is the fee audit stated in the financial statements?
Generally in the Notes to the Financial Statements, under general and administrative expenses, professional fees, or external audit services. It may also appear in the consolidated statements, in the corporate governance report which sets out the audit firm's name and the contract value, and in the summary of the annual report.
How can it be found quickly?
Open the annual report through the investor relations menu on the company's website, look for the notes to the financial statements, check the corporate governance report, use the search function with keywords such as "audit", "KAP", or "professional services", and then compare the figures across years.
How is the audit cost calculated?
It generally follows the formula of audit hours multiplied by the auditor's hourly rate, plus operating costs and the firm's margin. The determining factors include the number of working hours and the seniority of the team, the complexity of the statements and the audit risk, the size of the company and the number of subsidiaries, the quality of internal control, and the auditor's reputation.
What is the range of fee audit in Indonesia?
Based on the annual reports of listed issuers, mid-sized companies range from around Rp300 million to Rp2 billion a year, while large or multinational companies range from Rp3 billion to Rp10 billion. The finance and energy sectors are generally the highest, because their risk and regulation are more complex.
Why should investors pay attention to the fee audit?
As an indicator of transparency and governance, and also of risk — a fee that is too low can suggest the audit was rushed, while one that is too high risks creating dependence of the auditor on the client. This data is also commonly used in academic research on audit quality.
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.
Conclusion
To learn more about the audit fee, the calculation process, and the relationship with audit quality, visit the main page Audithink.
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.
