Financial executives from US public, private and non-profit organizations reported an increase in audit fees over the previous year. Not surprising, but what really stood out was how much higher audit fees were for decentralized operations over organizations with centralized processes. The survey reports, on average, public companies with centralized operations paid $3.7 million for their annual financial statement audits, while those with decentralized operations paid $4.6 million. Private companies with centralized operations on average paid $103,500 for their annual financial statement audits and privately held companies with decentralized operations paid $354,600.
The FEI has always held that centralized operations are more efficient. They reiterate this in their latest findings, “We continue to believe that the audit of financial statements of a company with centralized operations is more efficient than that of a company with decentralized operations, and this year’s survey results demonstrate that this still holds true,” Marie Hollein, President and CEO of FEI and its research affiliate, the Financial Executives Research Foundation.
Audit fee cost savings for an organization with centralized operations are substantial, however, there are far more efficiency gains and cost savings to be had in a centralized environment. And unlike auditing fees, these gains can be felt on a daily basis.
At a high level, centralizing allows an organization to manage common functions in one location, alleviating satellite office requirements. Repetitive information/data can be stored centrally. Document management is streamlined, purchase orders, receivables, invoices, orders and contracts are all stored in one location and access by all satellites. Additionally, the organization would benefit from enhanced control and security – streamlined processes and reduced demand on satellite resources.
Further gains can be realized when an organization implements a solution such as Binary Stream’s Multi-Entity Management (MEM). For Dynamics GP users in decentralized environments, there really isn’t an option.
From an accounting perspective, a centralized organization using MEM would centralize their processing, share critical Master records, fully automate intercompany processing, eliminate manual syncing of Master records between databases, streamline month-end reporting consolidations, and maximize organizational access and control of data.
- Streamlined accounting processes – significant time and resource savings
- More efficient corporate processes – bottom-line cost savings
- Lower external auditing costs – free up operating funds
So why not look into how centralizing could benefit you? The positive impacts on day-to-day operations would be wide-reaching and a fully automated, centralized audit trail and the resulting lower audit costs would provide a significant annual advantage.
Want to know more? We’ll gladly share, and help you realize the benefits of centralization first-hand.