Discussion:Auditing Financial Statements-Reasonable Fees

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Discussion Forum Index --> Accounting Questions --> Auditing Financial Statements-Reasonable Fees


Micah (talk|edits) said:

15 November 2012
Help! I have been preparing tax returns (for individuals & small businesses) for over ten-years. I also do bookeeping for several small businesses. Recently, I decided to branch out a bit and also do a few financial statement reviews and compilations. Well, now I'm looking at financial statement audits. I accepted an engagement to audit financials (2-years) for a small business. But I'm not sure what's reasonable to charge for auditing these financials. Any suggestions?

Thanks.

RoyDaleOne (talk|edits) said:

15 November 2012
$15,000 per year and up.

$5,000 for review and up in my area of the world.

Micah (talk|edits) said:

15 November 2012
Thanks for the response.

The company is a small communications firm. One employee (the owner), who uses subcontractors to assist with the work. Revenues roughly $300K. I'm thinking I should factor this in. Do you agree?

Captcook (talk|edits) said:

16 November 2012
Audits are expensive. Roy has given a pretty good estimate. If you are new to the field, there is no way you will get through the due diligence AND actual audit analysis for less than $15K. That said, if you have never performed auditing, I highly suggest you find another CPA to review your work. There is a lot of judgment that goes with such work and that only comes with experience.

I'm curious. What purpose is driving a F/S audit? A company with revenue of $300K should not need an audit. As an experienced auditor of a small organization with VERY clean books, I figure I could perform an audit for about $11K if everything went according to plan. Could you reduce the scope to just a balance sheet audit? This would decrease your risk and due diligence.

Micah (talk|edits) said:

16 November 2012
The client is bidding on a contract and one of the requirements of the RFP is to submit audited financials.

I appreciate you response and will follow your suggestion to have another CPA review my work. Thanks.

PHIL MOODY (talk|edits) said:

16 November 2012
Have you priced what it is going to cost you for an audit program that meets current standards? PPC is very expensive.

Your peer review cost will probably increase, along with your malpractice insurance.

Rkrcpa1 (talk|edits) said:

16 November 2012
I agree with everybody else, performing a single audit (not to be confused with a "Single Audit") would be very costly given the peer review costs, audit programs, third party reviewer etc. I tell potential audit clients that they'll be into me for at least $3,500 before I do anything numbers related. Don't underestimate the amount of time spent filling out checklists, assessing risk, etc.

Pegoo (talk|edits) said:

6 December 2012
Last place of employment paid a local CPA firm:

125 / hr for a audit associate 165 / hr for a associate 2 220 / hr for a audit sr 370 / hr for a audit mgr

bill was at over 100k mmmmmmmm. Must be good to be that firm. They were paying people 35/hr. Think about profit margins on top of your hourly cost (factor in your own pay).

LemRI (talk|edits) said:

December 26, 2012
I think the fees listed above are fairly realistic in the accounting world. Keep in mind, you need to figure out the length of time to perform the audit.

So assume an average rate of $150, and at least 80 hours (two weeks). That's $12,000 minimum. You will probably require more than 80 hours of chargeable time, because if you haven't done it before you may have some "learning curve" in terms of documentation that you'll have to absorb and such. But I'd keep track of your time religiously, and bet on at least $12K.

As noted, your peer review will easily go up in price and you'll probably be playing $3-$4K for your peer review as a result.

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