Fees on a downward spiral

Article Abstract:

Fees for auditing work continue to decrease due to several reasons. Both Pearson, whose expenditure on auditing fee dropped by 18%, and Royal Insurance (13%) credit the expansion of their own auditing department and thus the downsizing of auditors from outside sources. Company divestments and reorganizations also contributed to the decreasing need for auditing. The Granada Group (13%) also cited these reasons for the cut but also added enhancement of information technology for decreased auditing work. Meanwhile, English China Clays (31%) claimed the decrease was part of its cost-control strategy. On the other hand, Arjo Wiggins Appleton (27%) and NFC (20%) said they were able to reduce fees by putting the audit out to tender. While Coats Viyella (32%) and Bass (33%) decreased the number of auditing firms hired, General Accident (15%) blames the exchange rate fluctuations on audit fees for the reduced auditing fee.

Compensation and benefits, Professional fees

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Choosing the auditors: entrants line up for a beauty contest

Article Abstract:

Most UK auditors are chosen for their general financial knowledge and for the personal relationship they can establish with their corporate clients. Very few of them are selected on the strength of their auditing expertise. In fact, auditing practitioners who advertise their technical ability too much may lessen their own chances of getting hired. Aside from the focus on personalities instead of expertise, the tendering process is another auditor selection practice that is hurting the profession. Companies have discovered that they can push down the auditing fee by as much as 30% if they put audits out for tender. This practice takes profits away from auditors in addition to making clients resentful of their former auditors who, in their thinking, had been overcharging them while in their service.

Appointments, resignations and dismissals, Letting of contracts, Competitive bidding

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