After nearly a decade of turmoil, companies have gained the advantage in negotiating with their auditors.
Tim Reason, CFO Magazine
April 1, 2010
Slashing audit fees does not necessarily mean a better corpus availability for the auditors. Nor does it help the auditors in any way. While the auditor is not indispensable, to a large extent, the lawyer is. There is a lot at stake for the clients at the lawyer's than at the auditor's door. Lets face it...the lawyer owns the client more than the auditor irrespective of the results. Calling a spade a spade, its a risk-reward trade off for the auditor. Now thats your profession that binds you to ethics. A lawyer's ethics is no more than protecting the interests of the client, come what may. so, lets leave the lawyers out of our discussion
Posted by Shivagurunathan Ram | April 19, 2010 02:09 am
OK, now that you have whipped the auditors, what are companies doing about lawyer's fees? Most are doing nothing. Yet, in many cases they are paying lawyers far more than they pay the auditors who are easy targets. Why should a company pay its law firm 100% of its standard billing rates, but insist that the auditors bill at 50% of their standard rates, which are much less than law firm rates. The audit firms carry the most risk from lawsuits while the lawyers carry no risk for their work, but they are able to bill at standard rates.
Posted by Paul Reddy | April 12, 2010 11:46 pm
I thought the point of Sarbox was not "check the box"? In fact, it was exactly that mentality that put many companies and audit firms in the mess that triggered a lot of the regulation. Audit fees should be scrutinized like all professional services..let's just keep this in the proper perspective..auditors are not filling out 10-40EZ forms.
Posted by Scott Barker | April 12, 2010 10:00 am
It's about time we returned to treating the cost of audits as a necessary evil to be driven as down as low as possible. Thank you, Tim, for outlining several good approaches to help public companies achieve this much needed cost reduction. The external audit creates little to no value in a well-run corporation. Internal audit in those corporations does a much better job of managing the financial aspects of the business. However, if the goal of the corporation is to "cook the books" then the external audit can add a lot of value. Please read my blog post "Massages Gone Wild" and you'll understand. Here's the link. http://saramcintosh.wordpress.com/2010/03/22/massages-gone-wild/ Thank you Tim and CFO.com for another excellent article! Ciao for Now, Sara McIntosh
Posted by Sara McIntosh | April 05, 2010 10:50 am
Here we go again! History repeats itself. Fees go down, hourly rates rise, so audit hours or staff mix change significantly and quality most likely will suffer. Unless of course as the article suggests its just a check the box commodity service.
Posted by Mike Corcoran | April 02, 2010 09:58 am© CFO Publishing Corporation 2009. All rights reserved.