Tracking audit hours against budget
How an audit manager compares logged hours with the engagement budget during fieldwork, reads early signs of an overrun and acts in time.
By Achekam · · 5 min read · For Accountants & audit firms in South Africa, Nigeria, Kenya
Most audit overruns are discovered at the worst possible moment: when the partner sits down to bill and finds that the hours spent are well beyond what the fee was built on. By then the work is done, the client has been told the fee, and the only choices left are an awkward conversation or a write-down.
The overrun did not happen on billing day. It built up during fieldwork, one extra afternoon on debtors, one more round of bank queries, one junior learning the client's system from scratch. A manager who watches hours against the budget while the team is still on site can see it building and do something about it.
Setting a budget by audit area
A budget is only useful if it is specific enough to compare with. "The audit is budgeted at so many hours" tells a manager very little in week two. A budget split by audit area, such as planning, revenue, receivables, inventory, payables, payroll, completion and review, tells the manager which part of the job is drifting.
Build the area budget during planning, from last year's actual hours where they are reliable, adjusted for what has changed: a new system, a new subsidiary, a significant risk identified this year. Keep the split in the planning documentation so the team can see what each area was expected to take.
In Achekam the comparison of planned and logged hours runs per engagement, under WORK & DELIVERY > Hours: Allocated vs Consumed. The area split is your planning paper's job; the engagement total is where Achekam tracks budget against actual. Use both: the engagement view to see that something is wrong, and the area split to find where.
Planning standards treat the plan as something that keeps moving. ACCA's summary of planning an audit of financial statements covers the overall strategy and detailed plan under ISA 300, and why planning continues throughout the engagement. A time budget is part of that plan and should be revisited the same way.
Logged hours against planned hours
The comparison is only as current as the timesheets behind it. Staff submit weekly timesheets that a manager, partner or administrator approves or returns. If timesheets for the audit team are two weeks behind, the comparison shows a job that looks under budget when it is not.
During fieldwork, make two habits non-negotiable:
- Timesheets submitted weekly, including the last days of the week on site.
- The manager reviewing them promptly, so that the hours on the engagement are real.
For a closer look, Time Reports offers ten reports for a chosen period, among them staff time and engagement time, exportable as CSV, XLSX or PDF. The engagement time report tells you who has been on the job and for how long, which is often where the explanation lies.
Reading the warning signs early
The total alone hides a lot. These patterns deserve a question while fieldwork is still running:
- An area well past its budget before its work is complete. If receivables has used most of its hours and the confirmations are still out, the rest of the area will overrun too.
- Hours rising on a single person. A junior repeatedly booking time to one section may be stuck rather than slow.
- Review hours appearing early and large. Heavy review in the middle of fieldwork can mean work is coming back for rework.
- The completion phase not yet started, with little budget left. Completion and review are the hours most often squeezed, and the most dangerous to cut.
The work desks help here. Each professional has a My Work list, and the Supervision, Manager and Partner desks show their level's review queue, returned work and risks. A manager who sees work returned again and again on the same area has found the overrun before the hours report shows it.
A worked example in words
Midway through an audit of a distribution company, the manager compares the engagement's logged hours with its plan and sees the job running ahead of budget. The engagement time report shows most of the excess on one senior, and the Manager desk shows the inventory section returned twice. The cause turns out to be a new warehouse system: the client's stock reports no longer reconcile to the ledger without manual work. That is not the team being slow. It is a change in the client's circumstances, and it belongs in a conversation with the client now rather than in a write-down later.
Talking to the client about extra work
When the cause sits with the client, such as records arriving late, a new system, or adjustments the client should have made, raise it while it is happening. Explain what was planned, what has happened, and what the extra work involves. Agree in writing whether the fee will change, and record the conversation on the file.
The conversation goes better with facts in hand: the hours planned for the area, the hours spent so far, and the specific reason. That is why the timesheet discipline above matters.
After the job: what the variance teaches
Once the audit is billed, look back. BILLING & FINANCE > Rate Cards & Realisation shows the age of unbilled work, realisation and recovery, built from the firm's rate cards. Time recorded by someone with no rate is counted as unvalued rather than estimated, so fill the gaps in the rate card before trusting the figures.
Questions for the debrief:
- Which areas overran, and was the cause the client, the team or the budget itself?
- Was any overrun recovered from the client, and if not, why not?
- What should next year's budget and fee assume?
- Did the team have the people the plan assumed? Week-by-week staffing is covered in planning staff capacity.
Where time was written down, the reasons recorded in the WIP Register are part of the lesson; see writing WIP up, down or off.
For your next engagement, write the area budget into the planning paper, agree the timesheet deadline with the team before fieldwork starts, and set a day each week to compare hours with the plan.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
