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I read in a BPP Text that audit fees should generally reflect the level of risk as perceived by the auditors from the client. However, in your video lecture on risk, towards the end, you explained that auditors might leave the audit fee window open to negotiation provided the amount of errors found on the FS is very minimal.
My worry is when will this likely become a contingent fee because it looks like one to me. If I understand correctly, contingent fees are also part of self interest threat sir? Or am I just misunderstanding the concepts?
A fee is contingent when it depends on the audit report.
Fees should depend on the amount of work and the audit risk. If more work than expected needs to be done to obtain sufficient appropriate audit evidemce then auditors should be able to ask for a higher fee to cover the additional work.
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