The situation
A professional services firm in the North West with turnover of around £12 million had been with the same Big 4 auditor for nine years. The relationship had started well, but over time the experience had deteriorated. The audit partner had changed twice in three years. Each new team asked the same questions the previous one had already answered. And the fee had increased every year without a clear explanation.
The final straw was the management letter. After a four-week audit involving six people, the recommendations amounted to three generic observations that could have applied to any business in any sector. The finance director felt the firm was paying for a brand name rather than a service.
What they needed
The board wanted to re-tender the audit. Their requirements were straightforward:
- A partner who would actually lead the engagement, not delegate everything to juniors
- A team that would learn the business and come back year after year
- A management letter with specific, actionable recommendations
- A fixed fee with no year-two surprises
- An auditor who understood the professional services sector
They invited three firms to tender, including Audit Group.
What we did
Before submitting our proposal, we reviewed the company’s published accounts and spoke to the finance director about the business – how the partnership was structured, what the revenue model looked like, and where the key accounting judgements sat. We wanted to understand the audit risks, not just fill in a template.
Our proposal named the audit partner and manager who would do the work. We set out our approach to the specific issues we’d identified: partner profit-sharing arrangements, work-in-progress valuation on long-running engagements, and the treatment of lateral hires and related retention payments.
We quoted a fixed fee that was significantly less than the incumbent’s charge. Not because we cut corners, but because our overhead structure is different and we don’t price in layers of internal review that add cost without adding value.
The outcome
We won the tender and completed the first-year audit within the agreed timetable. The handover from the outgoing auditor was straightforward – professional clearance was completed within two weeks.
Key results:
- The audit was completed with the same partner and manager we’d proposed – no last-minute substitutions
- Our management letter contained 11 specific recommendations covering internal controls, partner drawings procedures, and tax planning opportunities. The board described it as “the first useful management letter we’ve had in five years”
- The fixed fee was held in year two with no increase
- The finance director’s team reported that the audit was less disruptive than previous years because our team prepared better and asked fewer unnecessary questions
What the client said
“We should have done this years ago. The difference isn’t just the fee – it’s working with people who actually know our business and give us something useful at the end of it.”
Finance Director, professional services firm, North West England
