Maximize audit fees and minimize audit risk: 'a recipe for auditing success or failure'
The audit profession is always mindful of the costs of the auditing process that it undertakes. When the audit firm tenders for an audit it is done on a very competitive basis. If the audit firm wins the tender then the resulting consulting services is where the audit firm makes its revenue. The way to achieve this is to do a risk based audit, which is timed based. The audit firm therefore, in most cases, tries take as much consulting works as it possibly can, the aim being to maximize audit fees and minimize audit cost. The aim of this paper is to highlight some of the pitfalls once an approach such as this is undertaken, using the recent collapse of Heath International Holdings (HIH) as a case study in Australia.