Price for faster "justice"...er.."audits"

In today's The Star, there was an article which highlighted the possibility of legal fees being increased by 300% to 400%. There were, apparently, a torrent of opposition against this proposed increase. Not mired in legal proceedings myself (at present, at least), and being the always astute and money-minded accountant, I wondered how it would be like if the audit firms made a similar proposal with regards to their audit fees.

I started comparing the work of lawyer with that of an auditor, and found many common grounds (and gripes) between the two professions. So, I copied the article from The Star, and made some appropriate word-replacements, on top of shortening the lengthy article. The following is the end result from this little exercise:

"AUDITORS are not exactly the most popular people around and they are often the butt of jokes.

In many cases, it has to do with the fees they charge.


Most of us would have heard this universal joke comparing an auditor to a leech.

Q: What is the difference between an auditor and a leech?
A: A leech stops sucking your blood after you die.


Jokes aside, companies often complain about having to pay steep audit fees if they have to publish audited accounts, more so if the audits take a long time to settle. Thus, when MIA (Malaysian Institute of Accountants) announced last week that audit fees might go up by 300% to 400%, there was, not surprisingly, a public outcry.

Saying there is a price to pay for everything, MIA justified the rising costs to the better efficiency of the auditing system in completion of audits. He also claimed that auditors would have more responsibilities, spending more hours on audits and taking up fewer audits.

For companies, this is certainly no laughing matter. Audit fees are based on market forces.

P. Sivarajah, CFO of X Sdn Bhd, an engineering company is still bitter over his experience with his auditor several years ago, complaining that he had to spend RM200,000 to get an audit opinion from one of his two accounts.

“They strike you in dire times,” he recounts, adding that his auditor would demand payment just before the signing date.

The auditor, he adds, showed little concern for his company’s welfare and he believes the audit had dragged longer than necessary.

Auditor, *Yaw Koo Lin, however, believes that MIA was only expressing their frustration with the Clarified ISAs (International Standards on Auditing) introduced more than a year ago.

Because of the Clarified ISAs, many auditors claim audit committees are harder to work with.

As N. Surendran claims, auditors are not able to take on as many audits and the ability to make ends meet is reduced.

“So, naturally, they will charge more,” he says, adding that he cannot take up as many pro-bono audit now as a result.

Idris notes that a common complaint among auditors now is that audits are hurried along and dates are fixed without consultation.

“As a result, auditors are saying they are under tremendous pressure,” he says.

He also hopes that people would be more appreciative of auditors.

“People have to understand that behind the five-minute appearance in an audit clearance meeting is five months of work.”

As you can see, this development in the legal world can easily be replicated in the auditing realm. Hence, I suggest that the audit firms around the country rally behind their lawyer friends and push for the proposal to be adopted. Then, once the dust have settled, the audit firms can make their own play for an "across-the-board" increase in audit fees, citing the increase in legal fees as a precedent.

Imagine the favourable impact of such an increase. The recently announced global revenue for Deloitte and PwC of USD 26 million each in 2010 will be immediately increased to USD 78 million!!!

A different strategy may also be adopted, by making such a push for audit fees now, at an increase of less than 300% to 400%, and chances are the corporate world will be too busy fighting the lawyers that the auditors will have little or no opposition.

To read the actual article in The Star, go to http://thestar.com.my/news/story.asp?file=/2011/2/27/nation/8144096&sec=nation