Basis of calculating /estimating accountant/auditor fees

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Setanta12

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Is there a rule-of-thumb re number of hours a junior-accounts person might spend on a job and his supervisor and the partner i.e. for every 7 hours a junior spends, the reviewing partner will spend 1/2hr ?

Specifically I'm enquiring re a normal accounting job but for which there might be a lot of donkey work, as opposed to technical accounting conundrums. (Our accounting/audit fees have doubled this past year with no new services added. I appreciate we don't see the hours-behind-the-scenes, but to get some basis for a counter-proposal.)
 
Do you really need to know or care about their internal processes? Why not just seek alternative quotes?
 
This is an invoice received for work already completed.

Certainly I believe there is an abuse of trust here - but that is a matter for another day, the matter to hand of trying to come up with a lower (fairer) amount to pay is what I'm trying to establish (and very much appreciate how its a 'how-long-is-a-piece-of-string' type query I'm asking).
 
I doubt that there would be any such rule of thumb. It would depend on the type of work being done and the state of the work.

It would be very odd for an audit fee to double from one year to the next without there being a very good reason.

It would also be very odd for the accountant not to say why the bill had doubled. Did he not give a reason for the doubling of the fee? Were the books in worse shape? Was there a revenue audit? Did you need a lot of extra advice?

You need to change your accountant if you don't trust him.
 
I can only think of one reason for fees jumping like that. Was there a set fee for the previous year, maybe it was the start of the relationship and an agreed fee was in place for one (or a number) of years, which has since expired.

Its a very bad bit of client relationship management to increase fee's like that without explaining the reason to the client.

One other question OP, are you one of the clients or merely an employee of the client, there may have been additional work done that you were not aware off, if you are an employee.
 
Kildavin said:
Is there a rule-of-thumb re number of hours a junior-accounts person might spend on a job and his supervisor and the partner i.e. for every 7 hours a junior spends, the reviewing partner will spend 1/2hr ?

Specifically I'm enquiring re a normal accounting job but for which there might be a lot of donkey work, as opposed to technical accounting conundrums. (Our accounting/audit fees have doubled this past year with no new services added. I appreciate we don't see the hours-behind-the-scenes, but to get some basis for a counter-proposal.)
Click to expand...

Different firms will tend to have different fixed and variable costs bases as well as different staff allocations for each job type.

Its therefore unlikely that a direct comparison can be made between differetn firms, but in these days of "the bottom line" a firm's charge out fees should certainly be consistent with previous years for the same service.

Here's the thing - I don't think they're charging you for the same service and you need to find out what was done differently this year.

A lot of additional work seeing where costs could be trimmed, or some creative accounting that cannot be spoken about below a certain echelon perhaps.

Never an easy one to suss out remotely.

ONQ
 
Kildavin said:
This is an invoice received for work already completed.

Certainly I believe there is an abuse of trust here - but that is a matter for another day, the matter to hand of trying to come up with a lower (fairer) amount to pay is what I'm trying to establish (and very much appreciate how its a 'how-long-is-a-piece-of-string' type query I'm asking).
Click to expand...

All we can do here is guess, so why not do the obvious thing and simply ask for an explanation.... it has happened to me a few times when dealing with advisers and that is what I did. Some were able to justify the fees and two actually reduced their fees.

Jim.
 
Increasing fees for no apparent reason is sometimes a way for advisers to dump unwanted clients.
 
It could be a case that your accounts are late or something and require an audit now instead of just a set of accounts. Significant extra time to be spent on the job now (more than you could believe). Auditor should have advised of this beforehand though.
 
While not a solicitor I would doubt that the accountant would be able to recover his fees in court. my understanding is that there has to be a quote in writing before the debt can be recovered.

I'm sure there is an engagement letter - does this say anything on the matter?
I'd ask him to justify his fee increase, offer him the same as last year. let him wait and walk.
 
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