This article was first published in the July/August 2016 China edition of Accounting and Business magazine.

When I speak to CFOs about cost management, how much a company pays in audit fees is not typically top of mind. Every enterprise has to be audited, they shrug, and the cost has long been baked into the budget. Audit fees probably come into view only when the auditor is changed, a relatively rare occurrence.

In fact, audit fees can be significant. Last year, global bank HSBC paid its auditors US$62m, up 53% from the year before, according to its annual report. That’s because it changed auditors from KPMG to PwC, so it had to pay both accountancy firms. In contrast, Singapore Airlines paid only the equivalent of US$1.2m in fiscal year 2014-15. 

That’s a huge difference. HSBC’s audit fees in 2014, when KPMG was the sole auditor, came to US$663 for every million dollars in revenue. Singapore Airlines’ audit fees equalled just US$105 in the same period. As a benchmark, the average audit fees per million dollars in revenue among accelerated filers in the US (public float of US$75m but less than US$700m) was US$550 in 2014, according to a study by AuditAnalytics.com.

I would argue that in the current uncertain business and economic environment, where every dollar counts, even audit fees should be reviewed and ways found to control increases, or even reduce the amount paid.

How? A paper by the US-based Financial Executive Research Foundation (FERF) is instructive. FERF researchers analysed reports filed by 7,071 companies with the US Securities and Exchange Commission as of September 2015. They found that 15% managed to keep audit fees flat or reduced them for two consecutive years; 4% did so for three consecutive years.

The researchers interviewed finance leaders from some of these companies and also spoke to a number of audit partners. ‘These interviews revealed similar themes and highlighted the importance of working with auditors to find more efficient and effective ways to complete the audit,’ they wrote.

The strategies include reviewing the audit process, improving internal controls, and tracking audit hours and fees. The researchers also suggest centralising the audit footprint, implementing automation, hiring knowledgeable staff, and taking the time to prepare documentation beforehand and to lock down schedules for staff interviews and walkthroughs. 

Many of the approaches described are common-sense steps, but I suspect they are not being done because of complacency. The CFO may be lulled into thinking that there is no longer any need to review the process or track audit hours, for example, especially if the same team has been doing the work for years.

That could be a mistake. One finance leader interviewed said the finance team took the time to track the hours they spent on various finance processes. So when the auditors estimated that it would take 1,000 hours to review the COSO Framework on internal controls, she countered that it took the company only 400 hours to implement it.

The auditors initially proposed ‘a six-figure process’, said this finance executive, who is director of financial reporting and compliance. ‘But since we tracked the time we spent internally, we ended up well under half of that amount and were able to push back in other areas.’ 

Don’t be afraid to push back. Benchmark the hourly rate you are charged against what other companies pay. That may make the difference between paying HSBC-like fees and the lower outlay of Singapore Airlines.

Cesar Bacani is editor-in-chief of CFO Innovation