If a quick look into your customer’s financials reveals an increase in their audit fees, it could be a sign that customer’s in some serious trouble.
According to experts, when an organization gets hit with increased audit fees, it’s likely because of one of these situations:
1. The auditors are charging a risk premium to safeguard themselves in the event something goes wrong (which they have reason to believe in the first place), or
2. The auditors are unsure about they’re seeing in the audit — and need to investigate further to find out what it is.
Plus, research shows companies that see a bump in audit fees — that’s significantly higher than their peers — end up with decreased operating performance in the next year.