Fees

NotesVideoQuizPaper exam

The basis of calculation (e.g. hourly) must be clearly stated

Any reference to fees must not mislead the reader about the precise range of services and time commitment that it relates to

You can compare your fee to others if..

  1. It is for the same service

  2. It is an objective comparison

  3. It doesn't discredit the other

  4. It doesn't create confusion

Percentage discounts may be offered but must not detract from the firm or the profession

Assurance Engagement Fees

  • Not calculated on a % or contingency basis

  • Due to self-interest and advocacy threats

Non-Assurance Engagement Fees

  • Contingent fee possible only if possible range and variability of the fee is small

  • Approval by the audit committee may be needed

Setting Fees

The following needs considering:

  1. Level of expertise needed

  2. Time needed

  3. How important the work is to client

  4. The risk of taking on the work & costs incurred

Low-Balling

This is setting the initial audit fee low in order to win the client

Ethical Issues:

  • Client needs to stay to recover the initial losses so independence is impaired

  • Possibly unprofessional because many smaller practices can't compete

NotesVideoQuizPaper exam