Minimizing audit fees, a lesson learned
Significant audit fees incurred. A biotechnology company engaged an audit firm to perform its first financial statement audit, which they intended to provide to potential investors. Once the audit was underway, management realized they were not prepared for the process, leading to additional fees and significant delays. The process was initially estimated to only last one month, and after five months in, they realized they needed help.
Signature Analytics’ Solution:
Our team got to work, and we prepared appropriate accounting work papers. Initial audit request lists often include 100+ items. Putting together this supporting documentation for all balance sheet and income statement accounts is easily one of the most time-consuming aspects of the financial statement audit. It becomes even more grueling for a management team that is not familiar with the process and is unsure of where to access the appropriate data. And if that data is even correct.
Many of our accountants have previously been auditors themselves, so we knew what schedules and support the auditors were looking for and could handle inquiries and follow-up questions that came up during the audit process.
ROI: Could Have Eliminated $30,000 in Unnecessary Audit Overrun Fees
By stepping in and correcting the company’s financial statement accounts and preparing schedules, we were able to bring the audit to a close and mitigate the additional overrun fees that would have continued to incur. Had we been engaged before the audit process had begun, we would have fully prepared them for the process, eliminating up to $30,000 in unnecessary audit overrun fees.
While this is not your average success story, it’s is a lesson learned for this company and many others who plan to go through this process. You don’t have to do it alone, and having a trusting financial partner by your side can ultimately save you money through more efficient processes and reporting.
Best Practices for Minimizing Audit Overrun Fees
- Get your financial and business records in order before the start of the audit.
- If you do not have an experienced accounting department, consider hiring outsourced assistance to ensure the process is organized and performed in a timely manner.
- Ensure management and internal staff are fully committed to the audit process and understand the expectations.
- Identify areas where assistance may be needed, especially relating to complex U.S. GAAP accounting guidance to avoid delays.