fee dispute. Should I get involved?

fee dispute. Should I get involved?

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One of my SA clients is a director in a property co which requires an audit. In the 2011 year their fee was audit £2750 tax and xBRL £525 plus VAT. They changed accountants to a smaller firm who had verbally agreed a monthly fee of £400. This company can only claim about 5% of input VAT so there may have been a confusion as to wheather the £400 included or excluded VAT. They have received fees of £3100 Audit, £840 Tax and XBRL and £3,500 accountancy (they were provided with TB and a ref file).

My Client has asked me to discuss this fee with the Auditors and negotiate a settlement. Would you do this and what fee would you charge?

Replies (5)

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By User deleted
06th Mar 2013 16:27

No

I wouldn't get involved. Regardless of how you feel about the fees or the client the issue is the client's and not yours. Up to them to negotiate.

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Teignmouth
By Paul Scholes
06th Mar 2013 17:24

Ditto

What Flash says however I would help the client to find out where it all went wrong. 

For example what are a firm of auditors doing not providing a written fee indication? 

What does their letter of engagement say?

Depending on what the LOE says about how fees are invented/formed/imagined then the client can ask for a breakdown of what was done, especially the accounts prep bit.  If (god forbid) it's on a time basis then they can provide timesheets, if it's on a quote or fixed fee basis then it should have been in writing.

This advice should not get you that involved but should help the client frame their questions.

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By User deleted
06th Mar 2013 19:14

That said Paul ...

... ACCA are not keen on fixed audit fees as it places a limitation of scope (i.e. corners may be cut to keep on budget, rather than do all the work necessary for a proper audit opinion!).

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By Kingsgrove
07th Mar 2013 06:13

Agreed on the audit fees OGA

But looking at the split provided, it seems that the Accountancy of £3,500 is where the sticking point is?

I would get the client to focus on that, especially if the accounting information is good which or perhaps that's where the adviser is coming from, in that it wasn't?

All in all, just demonstrates the new need for us to be having discussions on fees while doing the work where it's clear (in our opinion) there are going to be overuns.

 

 

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Teignmouth
By Paul Scholes
07th Mar 2013 07:43

Fixed Audit fees

Hi OGA - yes I agree, I always quoted for audits but was very precise over what that covered and so the door was open for fee increases (or even deceases) if the work was significantly different to anticipation.  The ACCA were fine with this.

Why I used the phase "god forbid" on time based fees is that if the firm's letter of engagement/terms & conditions stipulated fees based on time spent and there was no formal indication or estimate AND the client agreed then, unless the client can prove the accountant was sitting there picking his nose AND adding it to the time sheet, then the client is stuffed.

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