What happened
KPMG, a Big Four accounting firm, requested its auditor to reduce audit fees, specifically by passing on cost savings derived from the auditor's implementation of artificial intelligence in their processes. This action introduces a new condition for audit fee negotiation, directly linking pricing to the auditor's technological efficiency gains and operational improvements.
Why it matters
This action introduces a new operational constraint for procurement and finance departments, requiring them to assess and negotiate audit fees based on the auditor's internal technological efficiencies. It increases the oversight burden on these functions to understand and validate AI-driven cost reductions, potentially weakening the traditional transparency of audit service pricing models.
