Audit Fees of Public Accountants in Indonesia
The audit fees by public accounting firms in Indonesia can vary from tens of millions of rupiah to billions of rupiah per year. The audit fee will be determined by three components, namely the number of audit personnel, the time of personnel to be used for audit work, and the audit rate per hour per personnel. The size of the three components is determined based on the characteristics of the company being audited.
The audit implementation in accordance with professional standards will involve a public accountant who is assisted by the audit team. There are position levels according to their experience and qualifications, starting from assistant auditors, junior auditors, senior auditors, managers, and senior managers.
In general, medium and large public accounting firms have the personnel to fill in as managers, so a team for audit work by medium and large public accounting firms will usually involve fellow public accountants, managers, senior and junior auditors, and assistant auditors.
Under certain conditions, it is also required for the firm to perform an engagement quality control review on the audit engagement that must be carried out by personnel who are not part of the audit team, so that it will increase the audit fee component.
Each audit staff has a specific work area in conducting the audit.
The entire audit team cooperates to carry out the audit in accordance with applicable auditing standards and regulations so that the independent auditor's report is issued following the criteria determined by the standard.
Because each person has different qualification levels, then each type of personnel has their rates which are calculated per hour. TGS AU Partners for 2021 sets the hourly personnel rates which are:
| Position | Man-Hour Rate (IDR) |
| Rekan/Partner | 1,000,000 |
| Senior Manager
| 600,000 |
| Manager | 400,000 |
| Senior auditor | 200,000 |
| Junior auditor | 150,000 |
| Asisten auditor | 75,000 |
The audit fee is determined based on the estimated time that will be spent by each team personnel to complete the audit calculated at the hourly rate per each personnel.
An example of determining the annual audit fee for a small company with a simple business process (service sector).
| Position | Man-Hour Rate (IDR) | Works | Hours | Charge Out Rate (IDR) |
| Rekan/Partner | 1,000,000 | Planning, risk assessment, reviewing the entire implementation and concluding audit results. | 4.0 | 4,000,000 |
| Senior Manager | 600,000 | Manage the audit team in the overall audit process, including the audit team's work review. | - | - |
| Manager | 400,000 | Manage the audit team in the overall audit process, including the audit team's work review. | 8.0 | 3,200,000 |
| Senior auditor | 200,000 | Carry out audit procedures for strategic areas and review the work of junior auditors and assistants. | 30.0 | 6,000,000 |
| Junior auditor | 150,000 | Carry out audit procedures and collect audit evidence. | 60.0 | 9,000,000 |
| Asisten auditor | 75,000 | Assist the team to perform audit procedures. | 85.0 | 6,375,000 |
| Total | 187.0 | 28,575,000 | ||
Determination of the number of personnel and working time is obtained based on an analysis of the characteristics of the company, which are as follows:
Company size
- Small company vs medium company
- Companies with branch offices vs non branches
- Companies that have subsidiaries
The type of company
- Public Company vs Non TBk Company
- Member company of multinational group of companies
Business fields
- Service company vs manufacturing company
Financial accounting standards and regulations related to financial reporting
- General SAK vs ETAP SAK
The following is an explanation of audit fees based on the characteristics mentioned above:
Audit fees for small companies vs medium companies vs large companies
Small companies will have fewer transactions, less data will be checked, so that it will involve fewer personnel (although the composition remains the same, namely managers, seniors, junior auditors and assistant auditors) and less time for each person.
Large companies generally have a lot of fixed assets, inventory, employees, branch offices/warehouses and more transactions, so it will involve a larger team and more personnel time.
Audit fees of companies with branches vs no branches
Companies that have branches will need more audit teams. The audit team consists of a number of small groups, each group responsible with several branches. Each group will examine sales, fixed assets and inventory in the company's branches. Meanwhile, if the company does not have branches, the audit team will only be concentrated in the head office.
Not to mention the longer time because at least a minimum of one day is spent on travel (airport, flight, waiting time etc.) so it slows down time. Thus, audits for companies that have branches will incur higher audit fees.
Audit fees for Companies that have subsidiaries
Companies that have subsidiaries are required to consolidate the financial statements of their subsidiaries into their financial statements. Thus, in addition to auditing the company's financial statements, audits of the financial statements of subsidiaries also need to be performed. If a subsidiary is audited by another public accounting firm, it is necessary to conduct a review so that it will add extra personnel's time.
Conclusion for the audit of the company that has subsidiaries will require more personnel and time, so the audit fees will be higher.
Public Company vs. Non-Tbk Company Audit Fees
Public listed companies have a higher level of risk because the public investors have an interest in their financial statements. The authorities impose more requirements and complex rules, plus the professional standards also require a review of engagement quality control. With a higher level of risk and requirements, the audit of public listed companies will involve more experienced personnel and more time allocation. Thus, the audit fee of a public company will be greater (with a comparison of equal company sizes).
Audit Fee of PMA Company or Member of Multinational Company Group (Foreign owned company)
In the auditing of a PMA company or member company of a multinational group of companies, it generally involves a process of communication and coordination with the parent company and group auditors. Communication is required in English and in most cases the group auditor will do a review. With higher requirements, the audit of PMA companies or multinational companies has a higher audit fee (with a comparison of equal company sizes).
Service Company vs Manufacturing Company Audit Costs
Service companies generally do not have inventory, so there is no inventory cost accounting as in manufacturing companies. The audit team for manufacturing companies must carry out inspections of inventory purchases, production, and sales. This process takes more time than audits for service companies. Thus, audits of manufacturing companies will require more costs than audits of service companies (with a comparison of equivalent company sizes).
Audit Fees of Companies using General Accounting Standards (PSAK) vs. Accounting Standards for Non Public Accountability (PSAK ETAP)
General Accounting Standards (Financial Accounting Standards) has more complex requirements than PSAK ETAP, so the audit will take a longer time, so that it will have an impact on audit fees (with a comparison of equal company sizes).
Hopefully this explanation of audit fees can be useful for you. Follow our social media to get the latest updates on applicable tax regulations and accounting standards.
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About TGS AU Partners
TGS AU Partners is a group of Indonesian professional firms engaged in taxation, auditing, accounting, law, human resources, and advisory. The firm consists of KAP Agus Ubaidillah and Partners, Firm X Group Advisory, PT AUP Group Indonesia and Adishta Yogaswara Law
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