Our focus

Public relations agencies and other types of consultancy based solutions used by advertisers rely heavily on the expertise and knowledge of agency staff. Activities can be either in research, client servicing, communications management or promotional work. The key driver of cost to the advertiser tends to be fees for the time spent by agency staff servicing the account, rather than external third party costs being passed on.

Audits of such agencies find the following kinds of issues:

• Staffing of the account not in line with the agreed staffing mix, so that while the overall staff cost applied to the account may match the level planned, this is the result of a higher number of hours worked by lower hourly rated staff (meaning expertise may be missing from the account) or fewer number of hours worked by higher hourly rated staff (meaning workload issues could have resulted in gaps in service or errors).

• Staff assigned to the account which the client has not approved or simply hasn’t seen.

• Staff charged at incorrect rates or rates not applicable to their pay grade or position.

• Poor or limited time recording system not allowing for an accurate reconciliation of staff time utilized on the account in all areas, whether under retainer or on a project or actual time basis.

• If a staff cost plus model is used, there are a number of variables involved in the calculation of fees, including time, staff salaries and benefits or overhead components each of which can be recorded inaccurately or misstated.

• Staff charged on a % FTE, calculated as a % of a standard number of hours rather than the total hours the individual worked, which can lead to considerable over-recovery of the staff cost and any applied overhead rate when viewed in totality.

• Duplication of resourcing charged under in-scope activities (covered by retainer fees) and out of scope activities (covered by additionally agreed fees)

• Lack of control over staff expenses, with items such as subsistence, travel and hotels often not being in line with client’s T&E policies

• A lack of controls over staff and freelancers, particularly in the areas of confidentiality and intellectual property rights.

• Unclaimed aging credit notes