Reducing the cost of audit


Reducing your spend on regulatory audit costs

Is spending on audit too high, and projected to climb further in the coming years? Are more audits required this year than two years ago? If you answer yes to these questions, you aren’t alone.

While many firms continue to spend more on audit, others are actually spending less. The benchmarks conducted by the IT Policy Compliance Group (IT PCG) confirm this: firms with the most mature practices consistently spend less on audit fees.

Lower annual spending on audit fees are just one area of savings being realized by these organizations. In addition, they significantly drive down internal costs, including in IT, to support and sustain regulatory audit.

What are the potential savings?

The benchmarks show that among firms with the most mature practices, the level of spend on overall regulatory compliance is 50 percent lower, each year, than all other organizations of the same size, and in the same industry. Wouldn’t that be a nice bit of change to put to better use?

These 50 percent annual reductions in overall spend on regulatory audit include: legal services; professional service audit fees; other external services related to audit, and internal expenses to support and sustain audit results.

What’s realistic for savings?

Interviews with members indicate that 50 to 55 percent reductions are on the very high-side of what’s possible. More typical reductions, specifically for regulatory audit fees among the mature firms, are in the range of 30 percent: still significant and worth looking into.

Do the savings apply to all audits?

There is less opportunity in some situations than others to reduce audit fees.  For example, some IT PCG members in government and utilities say that sole-sourced mandatory audits don’t leave much wiggle-room for negotiating lower fees. But, for audits where there are multiple sources of professional services, there is greater leeway to “talk-turkey” as it were.

The caveat: savings by negotiating multiple bids, without improving the maturity of practices internally, are only going to cost more down the road. Once the replacement firm determines it can no longer profitably service your business, you are stuck with the same inefficient practices that are going to cost more with the next firm. Anyone can negotiate incremental year-over-year reductions. Based on the benchmarks, the sustainable savings are coming from automating the procedures and practices, year in and year out.

What can you do?

·       Talk with your peers about their experience

·       Identify multiple – often overlapping – audits and service sources. You might be surprised by what you find.

·       Separate the influence of competitive bidding from practice maturity to determine sustainable savings

·       Use the Interactive Tools at the IT Policy Compliance Group site to identify the upside

·       Establish realistic targets for what you’d like to achieve over the next three years

·       Implement the practice maturities that are shown to improve results

For more information

For more information on who is spending less, and what they do to improve internal procedures and practices, see the results from the benchmarks:


·       2008 Annual Report: IT GRC – Improving Business Results and Mitigating Financial Risks


·       Interactive Tools


These can all be accessed from the IT PCG home page:


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