Question

You are an audit consultant at a top tier accounting firm that is celebrating another year of fee income growth from one of its most important audit clients, a huge telecommunications business (think Telstra / Vodaphone). The last audit you did for this client had run smoothly from your company’s point of view, despite some hiccups on delivery times and quality control, but overall, your accounting firm were happy with the depth of this client relationship and its position to keep their business (future tax and consulting projects to the accounting firm of around $1.6 million).

However, yesterday, the telecommunications client asked for an internal review of your account service to negotiate a revised audit fee for the following three years. This leaves you and your accounting colleagues mystified as to why they want to do this.

The client spoke to you yesterday, requesting a meeting to discuss and have stated that they were generally happy with the relationship but asked that the lead audit partner from your firm be removed from the team and they also want to lower the total audit fee by 15%. This will have a negative impact of $185,000 on the accountants.

Instructions (in pairs):

1. Meet with the client (your trainer) who will act out the above scenario.
2. Try to understand your client’s requirements / needs using some of the techniques covered in this unit e.g. listening skills, note-taking, confirming client requirements, responding effectively to client feedback.
3. Try and resolve any conflict or ill-will (if there is any) so that you don’t lose this client and the future work amounting to $1.6 million.

Answer 1

Clients wants to meet up for a discussion over a fee reduction and lead audit member out of the team: -

.1) Since we know this before hand we should try to find out the differences we had in last year assignment particularly involving lead member as they want him out.

2.) Reduction in Fee: - Try to find out their business growth, whether their have been any impact on the business and profits have been hit. If their is genuine reason behind fee reduction then we can negotiate since we have to maintain relation with them as they are big client and usually we get referred by them to other clients also. if there is any other reason they should go deep and analyse the situation with open mind and take the decision. If they are rigid on reduction, we need to find out whether we would be able to take that revenue hit or not and decide accordingly for the firm and their partners well being.

3.) Try to find out are they doing this to with our firm only or other parties also: - If we can find out this we can analyse their mindset and what they are upto. We as a firm need business not headaches. Better have limited cleints who are genuine than unlimited clients who doesn't pay.

4.) confirming client requirements: - If scope of the work is reduced and therefore fee is reducing then we need to find the reason behind it as it is not a good sign for a firm. If requirements is constant or increase in scope then we should adjust the fee in an upper order and remain constant on fee. Convince the client we know your work since last few years and we knoe all the do's and Don't of your organisation and would be able to provide better service than any other organisation. We need to show them our worth why we are better than the others and we deserve this amount. try to come up with a case when you help client from one legal penalties as you guided them well and fee was miniscule part of the penalty amount. There was a value which our firm provided and fee was nothing in comparison to value provided.