An INGO invites bid from interested CA firms for audit service for the calendar year 2014. Upon request Lakhe & Co, Chartered Accountants, the INGO does not provide information about the audit fees for the year 2013. Please advise whether Lakhe & Co should submit his bid for the audit or not.
As per council decision/code of ethics in relation to minimum audit fee, an audit firm shall take into account the audit fees of the previous year while quoting audit fees such that the current year‟s fee should not be less than the previous year. If information about the previous year‟s fee cannot be obtained, the auditor shall specify in his proposal that his fee shall be higher of the proposed audit fee and previous year‟s audit fee.
So, in the given case, Lakhe & Co can submit his proposal clearly mentioning that the audit fee shall be the higher of the proposed audit fee or previous year‟s audit fee.