A common question which I am asked quite frequently is ‘how much should I be charging for an audit’ and ‘how long should it take to do an audit?’.
Often these questions are asked because firms have lost an audit client to another firm who can do the job for substantially less than the outgoing firm has been charging and this often leaves firms perplexed because they, themselves, have often been wondering how a firm can charge up to, say 40% less, yet do the job in accordance with the ISAs. Firms have also asked me this question when they have been subjected to a quality control review from their professional body and they have run into problems because of poor quality audit work when they were under the impression they were doing things right.
This article will look at some of the issues firms need to consider when quoting for audit work, particularly due to the new standards which are starting to bite and how firms can ensure they do work in accordance with those standards.
It is fair to say that competition within the profession is fierce at the moment, and firms are struggling to balance compliance with regulation and surviving in a competitive environment. So how long should an audit take to complete and how much should we charge for it?
The answer to both questions is ‘it depends’. As all practitioners know, the more work involved and the more complex the assignment, the more the fees should be. In terms of the length of the assignment then again, this would all depend.
A common theme in the comments on my
article, and certainly from regular threads posted on
is that other authorities such as HMRC and Companies House are accepting accounts which fall short of the mark in terms of basic issues – this is undoubtedly also the case for audited clients and firms that are trying their best to do things right and fight their way through the red tape are often exasperated because of the increasingly burdensome requirements we all face nowadays, many of which are cited by those in the profession as being ‘over the top’ for SME clients who do not understand half of the disclosures or auditing requirements anyway. Firms (audit and non-audit) are also becoming increasingly irritated by the increasingly ‘lax’ attitude of the regulatory bodies such as HMRC and Companies House because practitioners are subject to rigorous legislation and standards which are seemingly ignored by the various government departments in many cases and allow negligently prepared accounts to slip through the net.
About Steven Collings
Steve Collings, FMAAT FCCA is the audit and technical partner at Leavitt Walmsley Associates Ltd where Steve trained and qualified.