[Exclusive] "We'll Cut 40 Million Won Off"... Audit Fees Hit 5-Year Low Amid Fierce Price War Among Accounting Firms

More Clients, But Fiercer 'Undercutting' Competition
Audit Fees for Freely Selected Firms Lower Than Designated Ones
"Less Audit Time and Some Items Skipped"
Growing Concerns Over Small and Mid-Sized Firms Being Driven Out

The audit fees of major accounting firms have recently dropped to their lowest levels in the past five years. This is due to intensified cutthroat competition among large accounting firms over contracts for listed companies in the free selection market during the last fiscal year (2025). As a result, concerns are growing over potential declines in audit quality and the possibility that small and mid-sized accounting firms may be driven out of business.

According to data submitted by the office of Representative Yoo Youngha of the People Power Party to the Financial Supervisory Service on May 27, the number of listed companies subject to free auditor selection and contracted by the Big Four firms?Samil, Samjong, Hanyoung, and Anjin?increased compared to the previous year. Samil led with 183 companies, up 12% (19 companies) from 164 the previous year. Samjong followed, with a slight increase from 173 to 175. Hanyoung increased from 125 to 152, and Anjin from 45 to 66, showing strong performance.

Under the auditor designation system introduced in 2019, companies such as listed firms can freely select their auditors for six years, after which they must be audited by an auditor designated by financial authorities for the next three years. From 2021 to last year, the number of listed companies subject to designated audits decreased for three consecutive years, resulting in an expansion of the free selection market. Last year, the proportion of listed companies subject to free auditor selection reached 64.1%, the highest since 2019. In particular, more than 30 large companies with assets of over 2 trillion won, which are among the top tier, entered the free selection market last year, intensifying competition among the Big Four.

Even the Industry Leader Joined the 'Dumping' War

Amid fierce competition for contracts, the audit fees for listed companies charged by the Big Four dropped significantly. Hanyoung saw the largest decrease, with the average fee falling 9.4% from 383 million won in 2023 (actual payment basis) to 347 million won last year (contract basis). Samil, the industry leader, also reduced its average fee by 3.6% during the same period, from 393 million won to 379 million won, joining the price war. Anjin and Samjong also saw declines of 2.8% and 2.0%, respectively. For Samil, Samjong, and Hanyoung (excluding Anjin), audit fees for listed companies fell to their lowest levels in the past five years.

In particular, the fees set for companies in the free selection market were significantly lower than those for designated companies. As of last year, Hanyoung's gap exceeded 400 million won (designated: 748 million won; free selection: 347 million won). The gaps for Samjong, Samil, and Anjin were 53 million won, 12 million won, and 11 million won, respectively. An industry insider commented, "Auditors bear the same responsibilities, but the audit fee gap between free selection and designated companies is excessive," and added, "The criteria for setting fees are questionable."

Concerns Over 'Reduced Audit Personnel and Time'

Within the industry, there are concerns that excessive price competition could lead to a decline in audit quality. The reduction in audit fees may result in less time and fewer personnel being allocated to audits. A representative of a large listed company stated, "As audit fees are reduced, the number of accountants visiting the field and the time spent on audits both decrease," and noted, "In some cases, items deemed less important are skipped altogether during audits."

There are also criticisms that intensified low-price competition has further squeezed the space for small and mid-sized accounting firms. A representative of a mid-sized accounting firm said, "The Big Four are aggressively lowering audit fees to offset the recent slowdown in revenue growth," and added, "Some are even offering fees lower than those of small and mid-sized firms, encroaching on the free selection market."