[mlwl8521]

1. Typically, how much is your company looking to earn when it comes to a new prospective client’s fees?

2. What kind of firm are you at? Big 4? National? Large regional? Small regional? Local?

I worked at a local firm where we were basically looking for 5k minimum, preferably 10k an engagement. I have a friend who works at Big 4 saying he never heard of a client that paid less than $100k in fees each year/engagement, and if there was a client that was in that economic level, they’d receive the least amount of respect and attention from the firm.

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CPA licensed - 2013
2 years public accounting
MAcc GPA 3.8

[Anonymous]

I'm at a medium sized regional in a top five city. We will take on anything from around $5K and up. Some contracts are over $2M.

My wife is a manager at a big 4 firm. The definitely do take on larger contracts, but will take on smaller “strategic” contracts to get their foot in the door somewhere. That being said, they aren't taking on a $10K contract to make money. They're taking on the $10K contract to do $50K in cost in the hopes that it leads to a big one.

[acamp]

Big4, Bay Area, lots of small start ups out here, so as mentioned, they take on a lot of strategic work hoping for growth. ie: one of my clients started at $30K in fees the first year, three years later the IPO year raked into $1M+ and ongoing in $600K+

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[Anonymous]

I completely understand why Big 4 firms and even large to mid-size firms look at their prospective clients in this manner. I get it. I just don't like it. Every company, big or small, new or established, deserves the same level of care and expertise regardless of what they can afford to pay in fees.

So here's a list of companies, that started out as small businesses using the CPA down the street, that the larger firms wouldn't have touched in their early years:

ALL OF THEM!!!

[fuzyfro89]

I don't know an exact number, but having worked in Big 4 audit previously, a typical audit will usually have at least $100k in recurring audit fees. Any smaller than that, and it's probably not worth it as a standalone client.

A few exceptions are probably for :

– international referrals from another office of the firm

– superstar management – I knew an audit partner who wanted to build a relationship with a certain finance executive who had been at several notable companies and wanted to showcase the firm and his abilities. I suppose you could equate this to taking a discount to work with/for someone like Elon Musk? The “marquee client” effect. Also with key relationships comes making a good impression with a PE/VC firm, who then retains the auditor for multiple companies in their portfolio(s) because they now have a relationship.

– future growth opp – notably in tech, but also in other growing companies, where they expect fees to grow substantially (ex. typical of pre-IPO, take it public, and then stay on)

I'm sure there are other situations, but those are the typical ones where the firm would probably accept lower fees in early year(s), but I still believe they don't want clients that are expected to plateau with <$100k in fees annually… at least not for audit. The risk assessment process, and high fixed costs in the operating structure just isn't built to squeeze in small audits. At least, not yet… but maybe one day.

[Author]

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