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It is a matter of negotiation.
Auditors cannot be forced to take on work that is not profitable, yet they want to get work which will permit profits. Usually the directors want a good value audit. Directors and management therefore negotiate to see if they can find a mutually acceptable price.
@Gromit…..Agreed. If one looks at an annual general meeting there are two areas in relation to the auditors outside of the presentation of the audit report. Those are:
1. A motion to retain or change the auditors/appoint new auditors
2. A motion to allow the board of directors to set the auditors remuneration.The auditor and the client agree the amount for the audit fees and this amount is indicated in the engagement letter signed by the client.
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