KPMG pressed its own external auditor to accept a substantial reduction in audit fees by arguing that new artificial intelligence tools would lower the cost of delivering its accounts, a negotiation that highlights growing pressure on pricing as firms deploy automation across audit work. According to KPMG’s public materials, the firm has been integrating AI agents into its KPMG Clara audit platform to automate routine tasks and refine substantive procedures, a capability it said should drive greater efficiency.

The discussions over fees came as KPMG rolled out generative-AI features designed to speed risk assessment and improve documentation, while also insisting that longstanding knowledge of its business should enable faster audits. Corporate filings and regulatory disclosures more broadly offer detailed breakdowns of professional services costs, underscoring how audit engagements are increasingly scrutinised for value and transparency.

Industry-level data show audit fees have generally trended upward even as firms invest heavily in technology, complicating claims that automation will automatically lower client bills. Market analyses of audit fees and historical reports indicate that average charges rose across many jurisdictions in recent years as providers expanded their toolsets and compliance-related workstreams.

Both parties offered tempered statements about the role of AI. Grant Thornton said: "High‑quality audits rely heavily on expert human judgment, so our fees reflect both the cost of our people and the cost of the technology that supports them. As these two elements evolve, pricing models may do the same." KPMG emphasised that "while it is true AI can create efficiencies, developing and operating AI systems can generate additional costs" and stressed that its aim was to use technology to strengthen audit quality. These remarks mirror the firms’ public descriptions of AI as an enabler that nevertheless requires significant investment and human oversight.

The episode is likely to encourage other companies to test whether productivity gains from automation should be reflected in lower audit fees. Procurement outcomes elsewhere show institutions are willing to weigh long-term cost commitments from big auditors when awarding contracts; for example, a major public university recently selected an external auditor partly on the basis of projected savings over a multi-year term.

The broader question for the profession is whether AI will chiefly enhance audit quality or whether it will also deliver sustainable reductions in price for clients. KPMG’s subsequent product and assurance announcements, which expand capabilities for automating disclosure checks and for providing AI-model assurance, suggest firms are positioning technology both as a quality improvement and as a new line of client service, an approach that may sustain, rather than shrink, the overall cost base for high-quality audits.

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Source: Noah Wire Services