PracticeAuditCompanies reject need for audit fee hike

Companies reject need for audit fee hike

FDs were asked: Are you prepared to pay more for your audit?

Link: UK companies told to prepare for audit hikes

UK companies are adamant that they are unprepared to pay the cost of higher audit fees, despite warnings that the price will rise.

With Ernst & Young and PricewaterhouseCoopers declaring that the price of audits is set to rise, this week’s Accountancy Age/Reed Accountancy Big Question has found that more than three quarters (76%) of companies are not prepared to pay more. Only 12% said they were prepared to foot the additional cost, with the same proportion neutral on the question.

Last November, the Big Question survey revealed that a massive 80% of FDs believed auditors padded their bills, a figure demonstrating that the general view of audit costs has hardly improved. This week’s Big Question suggests that accountancy firms looking for a hike in audit prices may not be met with encouragement.

Simon Scott, FD at Scottish property consultancy Ryden, said: ‘These excuses are a smokescreen that auditors are hiding behind to cover the costs incurred as a result of their own mistakes. Auditors are not a “value-added” cost; they are an overhead that must be minimised.’

Many felt accountancy firms needed to get leaner and more cost-effective, rather than increase fees.

As one FD put it: ‘They claim market forces, but they are the forces in the market.’

Another observed: ‘I haven’t met a poor accountant yet.’

There was unhappiness with efficiency and quality of audits, exacerbated by a sense that, because companies are obliged by law to use auditors, ‘they have us over a barrel’.

However, several FDs claimed to have reduced costs significantly by putting audits out to tender.

For others, better audits were worth paying for. Sue Emberton, FD for access specialists Alan Drew, said: ‘We would be prepared to pay more if there was value for money and you got an added service.’

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