SMEs slash costs by a third by putting audits out to tender.
Small and medium-sized businesses putting their audit out to tender slash their audit costs by an average of over a third, according to a new survey.
It also found that cost is the biggest factor in deciding to seek another auditor for 90% of businesses with turnover between £5m and £25m. The move to find new auditors is also bringing huge cost reductions and seeing some companies give up Big Five auditors for services from the mid-tier.
The survey by the Kato Consultancy, specialists in mergers and acquisitions in accountancy and law firms, showed cost savings made by re-tendering ranged from eight to 50% with average savings rising to a huge 35%.
One firm that sought another auditor, but stayed with their original provider, achieved a 25% cost saving.
The research points to a growing level of disquiet among some companies about the service received from accountancy firms. Of the companies questioned 82% say the range of services was the deciding factor in putting audits out to tender while 74% said quality was the overriding issue.
Phil Shohet, director of Kato, said cost and providing ‘value added’ services were crucial. ‘Firms that cannot provide these services to clients face the prospect of losing existing business and failing to attract new clients, to the detriment of their profitability and, ultimately putting the future of the firm in danger.’