There’s no easy answer, agrees Bednar of Bureau Veritas, but he reckons that’s not a problem. After all, he explains, any healthy relationship needs some conflict and “I always say, Keep things under tension and you’ll continue to drive improvement.”
Janet Kersnar is editor-in-chief of CFO Europe.
Keep a Lid on It
Unlike most other CFOs, Sven Erik Nielsen keeps his cool when the subject of auditors’ fees comes up. In fact, he’s downright laid back about the fees that other CFOs protest are spiralling out of control. The reason, says the CFO for northern Europe at UK tour operator Thomas Cook, is his company’s strong internal audit team. “We have a very comprehensive risk management programme and the auditors are happy with that. If we didn’t, they would have asked a lot more questions about the future and the risks we’re facing,” says the Stockholm-based finance chief. “As long as we have the compliance in-house, we don’t need that help from auditors.” Indeed, beefing up internal audit staff is just one way that experts say CFOs can keep control of auditor fees.
Recent research of 1,000 companies by The Hackett Group found that the average company spends $584,000 per $1 billion of revenue on audit fees. But companies that the researchers identified as “world class” — that is, companies in the top-quartile of a ranking based on a number of factors — are paying nearly 50% less than the average firm.
As part of CFO Europe’s latest auditing analysis, we polled 172 European partners at the Big Four to find out how they think clients can make the auditing process more efficient, and possibly cheaper. Many respondents cited basic project management skills — setting realistic deadlines, preparing documentation around major accounting decisions so that they are “auditable,” and running detailed planning sessions that involve both internal audit and external auditors. Another frequently cited area of focus was communication — many auditors said that clients waited too long before getting in touch about a problem or held back important information. (See “Tell It Like It Is” at the end of this article.)
Nielsen agrees that both good communication and project management are key to building a good relationship. As he puts it, that way “we understand their tasks and responsibilities, and they also fully understand ours.”
For more on how to control costs, see www.cfo.com/auditing