Study: Automating Internal Controls Associated with Smaller Audit Fees

By:
Chris Gaetano
Published Date:
Jun 9, 2021
iStock-519089329 Audit

A recent survey outlined in Accounting Today found that while 62 percent of audit clients expect fees to increase this year, mostly due to inflation, those that have automated at least some of their internal controls processes will see smaller expenses than those that have not.

But the savings seem to have had diminishing returns as more controls are automated. The survey, conducted by research and advisory company Gartner, found that companies with 50 different internal controls, with at least 25 percent of them automated, saw fee savings of 52 percent; however, those that had between 50 and 250 controls, at least 25 percent of which are automated, saw savings cut almost in half, to 27 percent (which, considering audit fees, represents a significant chunk of change regardless).

Overall, those companies that had less than 25 percent of their internal control processes automated paid about $1.2 million on average; those that had more than 25 percent of their processes automated paid about $900,500 on average.

Faced with rising costs in general, many companies have attempted to negotiate their audit fees with their firms; of those that did negotiate, half cut expenses between 3 to 6 percent while 45 percent said that their fees dropped by 6 percent or more.

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