Reducing your Audit Costs
The cost of an audit is affected by several factors, most of these factors are controllable by the entity.
- Condition of the financial records: Clean records of all events and transactions affecting the entity. All information related to the entity should be readily available, including support for financial transactions, bank statements, agreements, policies and procedures, etc. Having all this information available can dramatically increase the efficiency of the CPA firm's work, reducing their time and hence their fees.
- Competency of accounting personnel: Involving a competent bookkeeper with an understanding of accounting rules surrounding transactions reduces the time the CPA firm performing the audit must spend identifying and analyzing unusual transactions. Just having someone available to provide answers can save a tremendous amount of time and hassle.
- Ability to produce accurate GAAP financial statements: If a CPA firm if provided strong financial statements prior to commencing work they are able to focus on testing and move through the audit seamlessly.
- Complexity of the entity's financial situation and transactions: Complex situations inherently cause delays in the audit process, particularly when such transactions have not been thoroughly analyzed and accounted for by the company prior to the audit.
- Fee rates of the selected CPA firm: Fee rates can vary tremendously across firms. Large firms tend to have much more overhead to cover and therefore must charge much higher fees than specialized, smaller firms without national office expenses to cover.
- Tips to reduce costs: By hiring a competent bookkeeper to prepare the financial records and GAAP financial statements cost savings can be realized in multiples. Bookkeepers bill at rates a fraction of CPA audit fee rates, so anything you can have a bookkeeper do instead of the auditors can reduce the auditor's hours and thereby their fees. Make sure your bookkeeper's skill set match the complexity of your financial situation - for instance, if you have stock options make sure they know how to properly track those and calculate/record the appropriate expenses on such.
CrowdfundCPA is an affiliate of Artesian CPA, LLC, a registered certified public accounting firm.