small and medium-sized companies in Poland is being “destroyed” by
some medium-sized firms charging extremely low fees, according to
Rödl & Partner Central and Eastern
European managing partner Jens Jungmann said a couple of Polish
medium-sized firms, some working as part of global networks, have
killed the prices for audit work.
“If I have to audit a stock-listed company for
PLN30,000 ($9,100) that is a ridiculous amount, it is better to
shut down the company and go fishing. Some of them they are causing
harm to the market, harm to the reputation of the auditors because
it is ridiculous if an auditor works for [such a small amount],”
Jungmann would not comment on which firms he
referred to but specified he was not talking about larger mid-tier
firms or the Big Four.
BDO Numerica managing partner Kristof Zorde
said the market for the audit of companies up to PLN50 million,
similar to the UK Alternative Investment Market, was getting
“absolutely smashed” by low prices from these auditors.
Zorde fears that fees for larger listed
companies might be affected because clients see fees being dropped
in the lower markets. He added that undercutting fees so
aggressively made no economic sense at a time when requirements for
statutory audits were increasing resulting in larger, not smaller,
Zorde predicts the prices will slowly increase
but in the short-term it was a very short-sighted tactic that could
potentially affect the rest of the market.
Grant Thornton Frackowiak partner Przemysław
Polaczek agreed the market was being destroyed but suggested it was
partly to do with a lack of market expectations around audit
He said that because the capital market in
Poland was only founded in the early 1990s, investors in the
SME-listed market do not place a high value on who audits a company
– which forces firms to drop fees or lose customers.
“If companies are not obliged to choose good
auditors they feel safe to choose cheaper, smaller firms and put
pressure on reducing fees of their current auditor if they are
willing to do it. If not, they will move [to a cheaper auditor],”