Discussion:F/S Audits
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| Revision as of 19:25, 1 June 2006 Warren (Talk | contribs) (THe other thing) ← Previous diff |
Revision as of 19:38, 1 June 2006 Foxttron (Talk | contribs) (The truth of the) Next diff → |
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| {{ForumReplyPost|UserID=Warren|Date=1 June 2006|Text=THe other thing to consider is that 1st year audit generally cost considerably more than recurring work. There's definitely a lot more work involved. They might be able to lower the initial year fee by signing a 3 year commitment.}} | {{ForumReplyPost|UserID=Warren|Date=1 June 2006|Text=THe other thing to consider is that 1st year audit generally cost considerably more than recurring work. There's definitely a lot more work involved. They might be able to lower the initial year fee by signing a 3 year commitment.}} | ||
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| + | {{ForumReplyPost|UserID=Foxttron|Date=1 June 2006|Text=The truth of the matter is that today you can ask as much as you want. There is very little competition for Audit services because they are complex and very, very risky for any auditor. I think that based on the little information you posted is an extremely good bargain (i.e. I am sure it is not a Big 4 bidding the work.) | ||
| + | The motive behind high prices is also the fact that very few business need a Financial Audit nowadays unless they want to get "moneys" from the market (outside investors;) therefore, the exposure of certifying inaccurate results gives a huge exposure that needs to be compensated. | ||
| + | I would get more bids, and, hopefully, I may find an old fashion auditor that is not scared of today's market. }} | ||
Revision as of 19:38, 1 June 2006
Discussion Forum Index --> Tax Questions --> F/S Audits
| 1 June 2006 | |
| Ok, a little change of pace from taxes. I have a client who needs a Financial Statement audit done and wants me to find an auditor. This is a first time audit and the client is an investment advisory firm that grosses $10M in fee revenue. I was a Big 6 auditor over 10 years ago and guessed the aduit to cost $20 - $25k. The first quote I received was $30 - 35K (client doesn't like that quote!). Does anyone know the going-rate for an audit of this type? ("ballpark" figure is fine). | |
| 1 June 2006 | |
| What percentage of accounting fees for the audit year been realized on the unaudited financial statements? An audit is very labor intensive and is also subject to high liability insurance....I would think that 30K for a 10 million dollar client is not unreasonable. Partner fees in Florida are billed at 300.00 to 500.00 per hour, associate and staff accountant fees at 150.00 to 200.00 an hour and administrative expenses from 45.00 to 65.00 an hour. Add costs to that, and it sure does not sound unreasonable to me... | |
| 1 June 2006 | |
| I could see $30k for a $10M manufacturing company. That industry is more complex -- bigger revenue cycle, inventory, etc. My client's business is very simple -- they do not take custody of funds and are purely investment advisors only. But I do agree that the cost (insurance) for a firm to do an audit is ridiculous these days because of the risk/fraud exposure. | |
| 1 June 2006 | |
| Touche! Why not approach it then from a balance sheet perspective? If they have very little in ways of balance sheet items, a/r, inventory, a/p, etc. then it would be most likely that it is only i/s derived audit. I still would workup a figure based on hours that it would reasonably take and decide from there what will be involved. Yes, partners will not be present on most audits...only to the extent of signing off and maybe making an "appearance", but you know as well as I that working in the audit department, partner's have time invested in reviewing the audit workpapers and billed at those rates, it can be costly.
If the balance sheet is simple, then I would approach a potential auditor with those facts...all they are auditing then is the income statement. imho of course :) | |
| 1 June 2006 | |
| THe other thing to consider is that 1st year audit generally cost considerably more than recurring work. There's definitely a lot more work involved. They might be able to lower the initial year fee by signing a 3 year commitment. | |
| 1 June 2006 | |
| The truth of the matter is that today you can ask as much as you want. There is very little competition for Audit services because they are complex and very, very risky for any auditor. I think that based on the little information you posted is an extremely good bargain (i.e. I am sure it is not a Big 4 bidding the work.)
The motive behind high prices is also the fact that very few business need a Financial Audit nowadays unless they want to get "moneys" from the market (outside investors;) therefore, the exposure of certifying inaccurate results gives a huge exposure that needs to be compensated. I would get more bids, and, hopefully, I may find an old fashion auditor that is not scared of today's market. | |
