As you may know, when it comes to the audit fee it’s all about how much time the Auditors spend on your Company. As such, audit firms can provide an initial estimate of their fee, but they keep a close eye on the time spent and often have to bill for additional hours, days, or weeks (if it’s more than ‘weeks’, then there are probably other things for you to worry about!). As someone in business, I’m sure you’ll agree that this is fair enough.
So, what can you do to reduce the cost? Simple: Make the audit run as smoothly and quickly as possible – which is much easier said than done! “Simple, but not easy”. The aim should be to furnish the audit team with what they want, when they want it, in a format that they can follow, where the information is accurate, complete, and easy to validate.
This can be particularly tricky if your business is fully, or predominantly, based online. You see, Auditors generally like to see material proof of things and simple audit trails. Things like plant and machinery, stock, electronic bank settlements of individual sales and purchases. However, in an online business, you are likely to have online-only systems showing aggregated sales and receipts transactions. You may even have arrangements where the same third party is both a customer as well as a supplier, and they only send you a net balance statement. Demonstrating the audit trail can be tricky without the guidance of someone experienced in this area.
At this point you may, understandably, be thinking, “why would I pay yet another person to come in and work for us?”. Well, as an example, have a look at the millions of pounds of fees from audit engagements which audit firms pull in, clearly demonstrated in this report: https://www.accountancydaily.co/sites/default/files/accountancy_top75_feb2017_1.pdf. (Credit to Accountancy Daily – an industry leading source of information for Accountants, Auditors, and providers of Corporate Services). These firms continue to grow, and so do their fees.
The charge out rates for even junior auditors are often quite high (I have seen £500 per day, plus) so it’s in your interest to keep their time to a minimum. How? For example, if you engaged someone who reduced the audit time by (say) 3 days, you wouldn't get charged for 2 junior Auditors at £400/day and a senior at £600/day. That’s a saving of £4,200. If the person helping you cost your company £2,450, you’ve just profited by £1,750 because of engaging them. This is before even taking account of how much time, effort, and stress you will have saved your permanent staff – and there is a hidden financial benefit to that, too.
At DSV Accounting, we fully understand the audit process from the client’s point of view. We use our skills and experience in managing audits to help you reduce the amount of time, effort, and money that you ultimately put into an audit. If this post has inspired you to approach us for help with your audit, do get in touch and let us ease the pressure and cost.
Are you about to have a Statutory Audit (or even a non-statutory one for that matter)? Is it your first one, and you need help preparing for it, and getting through it? Have you been through audits before, but just don’t have the time this year? If so, and if you book us in early enough, DSV Accounting can help you get through your audit.
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