FirmDecisions is the largest independent global marketing contract compliance specialist
Why should I undertake a financial media audit?
A financial media audit must be undertaken on a regular basis to ensure that there is maximum financial transparency between an advertiser and its agency. In a media marketplace that is becoming more and more opaque, sadly it has never been more important for an advertiser to safeguard its media investment and guarantee contractual financial compliance on behalf of the agency. Only a financial media audit can do this.
When should I undertake a financial media audit?
A financial media audit can be undertaken at any stage during the relationship but, to ensure a sound financial foundation, at least 12 months' activity should be analyzed so therefore potentially no earlier than a year into a contract.
What should a financial media audit cover?
FirmDecisions would suggest that all aspects of the financial relationship are covered off – as per the contract. This should include (amongst other things):
- Validation of AVB calculation and return including discounts, rebates, and other agency benefits such as free space
- Client-Agency-Suppliers Invoice reconciliation
- Verification of correct charge of commissions & discounts
- Analysis of payment terms & cash-flow
- Audit of unbilled media accruals
- Verification of appearance
- Agency remuneration reconciliation
Undertaking these tests as part of a financial media audit will go a long way to ensuring transparency and better ongoing financial practice.
How often should I undertake a financial media audit?
A financial media audit should not simply be done when a client suspects a problem, but on a regular basis to make sure those problems never arise - using financial media auditing as insurance against overcharges and held balances. Within that, it would be unwise (and in many cases not possible within the agreed terms) to audit your agency any more than on an annual basis.
Who should undertake to manage a financial media audit?
To ensure maximum understanding of issues arising from a financial media audit, an advertiser would be advised to use the skill of an industry specialist auditor (we would say that of course) but, in essence, the main point is that it should be the advertiser who makes the choice – not the agency.
Should I commission a financial media audit when I leave my agency?
In some ways it is more important to undertake an financial media 'exit' audit after termination, than during the relationship, because it may well be the last opportunity to highlight and recover any funds owed, or alternatively 'net' any monies due against closing payments required. Embarking on a financial media audit at this time will also ensure that the end of the relationship has a clean financial break.
Financial media audits - Summary
The cost of a financial media audit should be a fixed fee and not based on recovery. Financial media audits should only be undertaken to ensure transparency - not for financial gain.
Regular undertaking of a financial media audits will ensure financial contract compliance and mean that monies are not owed – but already returned.