Tips To Reduce Audit Fee
a) Using a reliable and updated accounting software
We notice our time consumed in manual bookkeeping (hand written or excel spreadsheet) audit is three (3) times compare to the time spent in auditing of the account with reliable and updated accounting software. Therefore, using accounting software is not only help in managing your business operation. It is also reducing the workload of auditor and lead to lower audit fee.
b) Well prepared documentation
Auditors take lots of time in searching documents to support their reasonable assurance about whether the financial statements of the Company as a whole are free from material misstatement. Thus, a proper arrange documentation will definitely help in reducing auditors’ workload and time consumption.
c) Improve internal controls
Improving internal control can have a direct effect on the effort and cost of external audits. Since paying your own people is cheaper than paying their people, improve internal control yourself is better than you are paying expensive audit at the end. If this percentage is not growing, ask your external auditor what process improvements they believe would increase their ability to rely on your internal control.
d) Hire knowledgeable staff
Having well-trained company staff involved with the audit will help reduce audit fees. It is even better if your staff have prior audit experience, this will make the audit work run smoothly and your audit fee will be lower.
e) Quick responses to auditor requests
An auditor needs to work as efficiently as possible to complete the work on time. This is one area where the company and its auditor share the same concern. The auditor wants to complete the audit as much as the company does. It’s frustrating to an auditor when completion is held up while waiting to resolve a few issues or deal with incomplete documentation. Quick responses to auditor requests also build trust, while long delays in getting requested materials and documentation can make the naturally suspicious auditor even more suspicious. It will help in time saving when client is responding fast and the job completed in a short time, thus the audit fee can be reduced as well.
f) Transparency to auditors
The proper way to handle a contentious accounting issue is for the CFO and controller to bring any unusual or questionable accounting treatment to the auditor’s attention in the early stages of an audit. Then they all can discuss the issue and resolve it. If financial officers answer the auditor’s questions directly, without trying to hide something or cloud the issue, then the client is likely to get fair consideration.
But if the auditor discovers that a questionable treatment wasn’t brought to his or her attention by the financial officers, a climate of distrust is created. Then, at the very least, the auditor will look for similar instances and be extremely conservative in his or her judgments.
g) Don’t close account at 31 December
Most of the business owner prefer their company account financial period same with calendar year, this has caused the auditor extremely busy in their “peak” period and need to work overtime to complete the job on time. Thus, the audit fee normally will be higher for 31 December year End Company compare to other year end company in order to cover auditors’ overtime time cost.