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During the three years to 2014, audit service prices have trended upward at a moderate rate due to a steady stream of demand, while experiencing a medium level of price driver volatility; iver the next three years, service price growth is anticipated to accelerate, further limiting buyer power. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of Audit Services in its growing collection of procurement category market research reports.
Los Angeles, CA (PRWEB) July 11, 2014
Audit services have a buyer power score of 2.5 out of 5. This score reflects a relatively low purchasing power among buyers. Purchasers of audit solutions are challenged by the low availability of substitutes, high service specialization and significant switching costs. On the bright side, vendor financial risk is negligible, providing some relief to buyers, says IBISWorld business research analyst Agiimaa Kruchkin.
The pricing environment has largely undermined buyer power in the past three years. During the three years to 2014, audit service prices have trended upward at a moderate rate due to a steady stream of demand, while experiencing a medium level of price driver volatility. Over the next three years, service price growth is anticipated to accelerate, further limiting buyer power. As a result, buyers will benefit from establishing multiyear service agreements, hence locking in the current rate for the duration of the contract. Longer-term engagements may also have the added benefit of improving audit quality over the term of the agreement.
The mandatory nature of audit solutions has fueled demand for the service and, hence, boosted service prices. External demand drivers have also driven demand for audits in the past three years. For example, the number of initial public offerings (IPOs) is expected to increase robustly in the three years to 2014, fueling service prices. Similarly, the growing number of businesses and the rising value of trade have further necessitated audit solutions, says Kruchkin.
Some product characteristics are also not conducive to buyer power. Audit services have a long buying lead time, often involving an audit committee that is outside of the procurement department's scope. There are also high risks associated with selecting the wrong provider, and in certain high-pressure scenarios, such as mergers and acquisitions (M&As) or IPOs, buyers tend to go with the market leaders and pay higher prices for the associated credibility. Finally, measuring service quality is difficult and a poor audit may not be apparent until later. Fortunately, best practice suggests that audit providers are retained for about five years, which means buyers do not have to repeat this process very often. Major vendors include BDO USA LLP, BKD LLP, Crowe Horwath LLP and Deloitte. For more information, visit IBISWorlds Audit Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of audit services. Audit service providers are accountants certified to review the accounting records of public and private organizations and to attest to compliance with generally accepted accounting practices. Auditors are usually part of offices of certified public accountants (CPAs) and provide auditing financial statements and advice on matters related to accounting. Auditors are expected to be entirely independent of the companies or organizations they audit. They should present an unbiased and skeptical evaluation of the audited companys financial condition and statements for shareholders and other interested parties. This report does not include tax accounting services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorlds procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.
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