In a company, the auditor's remuneration is fixed by the company in general meeting, or in the manner the meeting decides. What goes into the quote is the work: the size and complexity of the client, the risk, the hours and the people needed. This post gives no fee figures. It explains who decides, what moves the price and how to build a quote you can defend.
Last reviewed: 17 October 2026. Facts checked. We opened a page reproducing Section 142 of the Companies Act, 2013 (remuneration of auditors), though the page had a few words missing in the text. We read search-result summaries of ICAI Code of Ethics provisions on fees, from secondary sources (legal blogs and a news summary), and did not open the Code text or the ICAI notice on fees from a single client. We did not find any ICAI guideline that sets audit fee levels, and we state no amounts, scales or percentages. Check the current Code before applying any rule.
Who fixes the fee
For a company, Section 142 says the remuneration of the auditor is fixed in its general meeting, or in a manner determined there. A proviso lets the Board fix the remuneration of the first auditor it appoints. A commentary we read adds that the meeting can delegate the fixing, for example to the Board or a committee, or set a formula. That is the commentator's interpretation, so check the text.
In practice the sequence is simple. You quote. Management agrees. The resolution at the meeting records the fee or the method. The engagement letter confirms the terms.
What "remuneration" includes
As the page we read puts it, remuneration includes:
- The auditor's fee.
- Expenses the auditor incurs in connection with the audit.
- Anything given to the auditor other than in cash.
It does not include payment for other services rendered at the company's request. That matters when you price non-audit work. See the point on independence below.
What drives an audit fee
Fees follow effort and risk. These are the usual drivers.
| Driver | Why it matters |
|---|---|
| Size and scale of the client | More transactions and balances to test |
| Complexity of the business | Multiple locations, revenue streams, group structure |
| Accounting framework | Ind AS or Accounting Standards, and the effort to check each |
| Quality of records and controls | Poor records mean more testing |
| IT environment | System reliance, ERP, data extraction |
| Risk profile | Fraud risk, going concern doubts, regulatory scrutiny |
| First year or repeat | First-year audits need more set-up and opening balance work |
| Additional reports | CARO, internal financial controls report, group reporting |
| Timelines and deadlines | Tight timelines need more people at once |
| Travel and location | Site visits and branches |
| Team seniority | Partner, manager and staff time at different cost |
Two drivers deserve more weight than most quotes give them. First is first-year work. Opening balances and understanding the business take extra time. Second is client readiness. A client who cannot produce a trial balance on time will cost more, whatever you wrote in the quote.
What the Code of Ethics says about fees
From the secondary sources we read:
- Contingent fees. Fees based on a percentage of profits, or contingent on the findings or results of the work, are not allowed except where the Chartered Accountants Regulations permit them. The cost optimisation example given is a case where a percentage of the benefit may be allowed.
- Overdue fees. A significant unpaid fee from an audit client can threaten independence. The firm is generally expected to collect it before the report for the following year is issued.
- Low quotes. Quoting less than another accountant is not in itself unethical. But the fee should not be so low that it threatens compliance with the principle of professional competence.
- Dependence on one client. The Code asks for disclosure to the Institute where fees from one audit client pass a set share of gross fees for consecutive years. The sources say this is a disclosure and safeguard trigger, not a flat ban. We state no percentage because we did not open the Code.
Our post on the ICAI Code of Ethics 13th edition covers the Code more widely.
How to build a quote, step by step
- Accept the client first. Run the audit engagement acceptance checklist. If you would not accept the client at any price, do not quote.
- Understand the engagement. Scope, framework, reports required, locations, deadlines, previous auditor, group structure.
- Estimate hours by area. Planning, risk assessment, controls, substantive testing by cycle, reporting, review and completion. The audit time estimator can give a starting point.
- Assign people. Partner, manager, seniors and articles. Show hours per grade.
- Apply your rates. Use your own cost and margin. The audit fee calculator helps you put the numbers together.
- Add expenses. Travel, stay and other costs, shown separately or in the fee as you agree.
- Add contingency for known risks. State what is assumed.
- Write the assumptions. Records ready by a date, access to staff, number of locations, no scope change.
- State what is excluded. Other services, special reports, extra work from restatements.
- Get it into the engagement letter. Use an engagement letter template and include fee terms, billing and the effect of scope changes.
What to put in the quote document
- The scope and the reports to be issued.
- The basis of the fee: fixed, or by hours, or a mix.
- The assumptions.
- What triggers a revised fee.
- Billing and payment terms.
- The team and timeline.
Be plain. A client who understands what drives the fee argues less when the scope changes.
Common mistakes
- Pricing to win, then cutting hours. Quality drops, and risk rises.
- Quoting without a scope, so the client assumes everything is included.
- No written assumptions about client readiness.
- Letting overdue fees roll over for years.
- Mixing audit and other services without thinking about independence.
- Copying last year's number without checking what changed.
Our guide to pricing audits in the AI era looks at how efficiency changes what you charge for and how you explain it.
Frequently Asked Questions
Who decides the audit fee in a company?
The company in general meeting, or in the manner it determines. The Board can fix the first auditor's remuneration.
Does audit remuneration include expenses?
According to the page we read, yes: it includes the expenses the auditor incurs in connection with the audit. It does not include pay for other services the company asks for.
Can a CA charge a percentage of profits as an audit fee?
The Code, as summarised in the secondary sources we read, does not allow fees contingent on results, except in cases the regulations permit. Check the Code and the regulations before accepting such terms.
Is there a fixed scale of audit fees from ICAI?
We did not find an ICAI guideline that sets fee levels or scales. Fees are set by agreement, within the Companies Act and the Code.
Can I quote lower than the previous auditor?
Quoting lower is not in itself unethical, but the fee should not be so low that it threatens your ability to do the work competently.
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Statutory facts on this page are checked against their sources, and the page says where it relied on secondary reporting. How we verify · Report an error