External Audit Costs 2044

  • I’ve been reviewing our external audit costs for our first live year (the benefits of being a foreign issuer…). Given that they have now billed their final invoice for 2006/7 I was interested to see how they compared to our own costs. To my horror I found that even though they relied on our work (allegedly) and kept their testing to a ‘minimum’ their costs represented 56% of my total SOX costs for the year (in which I have included all my in house testing costs, management costs and others).%0AHow does this compare with your first year of compliance and will it improve (ignoring the impact of the revised guidance)?

  • Wrightlot,
    I would suspect that there costs are this high due to their requirement to assign only those who have received SOX training during the year (SEC/PCAOB requirement that I recall from my former life in PwC).
    This means that their charge out rates tend to be very high for SOX related work (especially for FPIs, where there will be less trained staff) as most of the persons assigned will be of a higher level than should (in reality) be required.
    I have no details as to how our SOX fees will look yet (due to exemption from auditor attestation at year end 2006), but I would suspect that they will be considerably higher than our internal costs based on both charge out rates, and the fact that they seem to have no-one available to commence testing with us until the Autumn.
    This will likely result in a tight deadline for completion of work, leading to further hotel expenses, and overtime.
    Hope this rationalises the high cost to you.

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