audit-services-redacted (411)
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Substitute Services<br />
Negotiation Power<br />
1. None<br />
An <strong>audit</strong> is a legal requirement in many<br />
instances. Federal and state law<br />
requires that nonprofit organizations abide<br />
by certain financial reporting<br />
requirements.<br />
High Supplier<br />
High Supplier<br />
High Buyer<br />
2. Financial Review<br />
A financial review by an independent<br />
<strong>audit</strong>or examines the nonprofit's or nonfor-profit's<br />
financial statements to<br />
determine whether they are consistent with<br />
Generally Accepted Accounting<br />
Principle(GAAP). A review has the same<br />
objectives of an <strong>audit</strong>, but, it it not<br />
conducted with the same level of<br />
investigation or analysis as an<br />
independent <strong>audit</strong>.<br />
Supplier Power<br />
Low Supplier<br />
Low Buyer<br />
High Buyer<br />
3. Compilation<br />
Buyer Power<br />
A compilation differs significantly from a<br />
review or an independent <strong>audit</strong> of<br />
financial statements in that it is literally a<br />
compilation of financial records into a<br />
format required by Generally Accepted<br />
Accounting Principles (ex GAAP). If this<br />
work is performed by an <strong>audit</strong>or then it is<br />
referred to as a compilation and<br />
accounting standards require the <strong>audit</strong>or<br />
to assess whether the records contain<br />
obvious errors.<br />
High Buyer Power<br />
High Supplier Power<br />
Competitors rivalry<br />
Switching costs low<br />
Local suppliers an option<br />
Market share concentration<br />
Economies of scale<br />
Brand Recognition<br />
Target Price Savings Example<br />
Year-End<br />
19%<br />
Processing<br />
$4.50<br />
Reduction<br />
per W2<br />
200000 $175,000<br />
$141,750<br />
100000<br />
$33,250<br />
Total annual <strong>audit</strong><br />
<strong>services</strong> savings<br />
0<br />
Benchmark<br />
Target<br />
Savings Goal of 15%<br />
Savings at 19%