This Slideshare presentation is a partial preview of the full business document. To view and download the full document, please go here: http://flevy.com/browse/business-document/cost-reduction-within-an-audit-department-396 This case study gives an example on how to reduce costs within an Audit Department. This document provides information on allocation of costs within this Audit department, a roadmap to cut costs, results and specific cost reductions within this type of department. Additional content: an example decision making slide, additional non approved savings and situation & complication of the company. This project is part of an Overhead Vale Analysis (OVA) within a large company (± FTE). This document has been edited to prevent traceability.

1. COST
REDUCTION
within an
AUDIT
DEPARTMENT
CASE STUDY
v1.0

2. About this document
• This document provides information on:
– the complication of a large organization (2 pages);
– allocation of costs within the department (1 page);
– roadmap to cut costs (1 page);
– results of the cost reduction process (1 page);
– specific cost reductions within this type of department (1 page);
– example decision making slide (1 page);
– additional non approved savings (2 pages).
• This document has been edited to prevent traceability.
• This is a case study and consists of 10 PDF pages (excluding support pages).
Context:
• In recent years Competitor has passed the Company when looking at the cost base.
Pressure on corporate cost due to reducing opex base. The organization consisted of
approximately 9,000 FTE
• Audit Department base line: €1,29 million and 10,2 FTE
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3. Company
LOGO
EXAMPLE
Cost reductions within an Audit department
Presentation with suggested savings
2012
OPEX = Operational Expenses | CA = Corporate Audit
Audit Department base line: €1,29 million and 10,2 FTE
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4. Company
LOGO
Management summary
• Why overhead cost reduction? Total opex reduces 27% due to assumed sale of BU1 and
BU2 – Pressure on corporate cost due to reduce opex base
• In recent years Competitor has passed Company when looking at the cost base
• Audit base line is €1,29 million and 10,2 FTE - Core products are IT, Proces/Operational
and Project Audits and 'Special Investigations’
• The process started end of February and followed a five phase approach, to be finalized
with a presentation to the Board in June
• Implementing the generated improvement ideas would lead to a cost reduction of 22% - all
suggested ideas are supported by the Staff director
• Outcomes of brainstorm sessions lead to proposed reduction of € 0,29 million, all three
ideas are supported by the Staff director
• There is a request to the Steering Committee to decide on the supported improvement
ideas
• Appendix
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5. SITUATION COMPANY
Why overhead cost reduction? Total opex reduces 27% due to assumed sale
of BU1 and BU2 – Pressure on corporate cost due to reduce opex base
Company
LOGO
Opex Company
BU1
€ x 1 billion
Bu3
Company
-27%
2,2
2,4
2,4
2,3
§ BU3 and possibly BU1 will be separated
from Company. Project Z will cut operations
cost at BU9. This results in sharp drop in
cost operations. Indirect cost must drop too.
§ Overhead increased after sale of BU2
2007FC2 2008SP 2009SP 2010SP 2011SP 2012SP
Source: Board presentation 2012
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6. SITUATION COMPANY
Company
LOGO
Why overhead cost reduction? In recent years Competitor has passed
Company when looking at the cost base
Opex as percentage of net sales
(%)
Company
Competitor
2007
Source: Corporate Control, 2012
2008
2009
2010
2011
2012
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