We are a £10m revenue private company providing regulated advisory services to institutionalised clients. Our revenue is driven by a handful of contracts (15 contracts/yr at maximum) and 70% of our expenses relate to people cost (less than 30 employees). Does anyone have a benchmark % of revenue for the audit fee for this kind of company? Thanks.
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How long is a piece of string?
I'll suggest £6k for starters, but much will depend on the complexity of the business - could cost (a lot) more.
No benchmark I'm afraid as it really depends on your business structure, transaction volumes, systems and controls and quality of record keeping.
Depending on other factors you may need a statutory audit, which I assume you refer. In addition, you mention regulated activity, which may well have seperate audit requirements - client money, FCA reporting etc.
This is niche work, not covered by many practitioners, and as a result attracts a premium.
At that level of fees it sounds reasonably complex. Not entirely suprising to hear of the expected big increase. Many of the Big 4 firms are jetisoning both high risk audits (of which FCA is one) and low value audits (to them) to focus on larger fee work due to their own regulatory scrutiny, so you're right in the sweet spot, and this is their mechanism to dissuade you to retain them.
For me timing is irrelevant - most service audits can be undertaken remotely, given current restrictions, and the more pressing matter is the regulatory timetable and how quickly any handover between auditors could happen if you made the choice to move.
COVID may well have had an impact on your internal controls, as a result of working from home, so there may well be additional audit work required in this area.
Brexit impact will be on passporting, provision of services/dealing with customers based in EU and GDPR regulation, if relevant, which hopefully, you are all over and have adapted your business model to deal with. Again there may be an additional audit cost but impossible to say without the necessary info.
"We are a £10m revenue private company providing regulated advisory services to institutionalised clients."
I am not sure you intended to say the above, where are the clients locked up? (though maybe some of mine over the years ought to have been)
I don't think that % of revenue is a relevant metric. Many of the costs of audit are independent of revenue, particularly in a regulated environment like yours. If your revenue doubled, the underlying costs of your audit would not double.
There is undoubtedly a Big4 premium and you may well be able to cut fees by putting your audit out to tender.
I have an FCA regulated firm, one partner pays about £6k for Audit. T/o from nil to £2million or so, so its a small concern and there are virtually no transactions, under 500 annual and the accounts are spot on as I do 'em.
They pay essentially minimum fee and it takes at best 2 day of their time to do, and that is being generous to them. Most of the time they are just making up stuff to do quite frankly to look busy.
The auditors are fairly small firm, but you dont care who they are, its really a "cheap is best" purchase. Big 4 is a waste of money. I am ex big-4.