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APAC agencies obfuscate audits

News, 10 November 2016

SINGAPORE: The relationship between agencies and clients in Asia-Pacific has taken a further knock, as a new study suggests that some media agencies in the region seek to avoid transparent auditing procedures.

FirmDecisions, a marketing contract compliance specialist, based its conclusions on the 121 audits it carried out in 13 countries, including Australia, New Zealand, Singapore, Thailand, Indonesia, Malaysia, Hong Kong, China, Japan, Korea, Philippines, Vietnam and Taiwan.

Campaign Asia-Pacific reported the findings, including the fact that 26% of advertisers across the region did not actually have a signed contract with their media agencies.

Beyond that, 25% of contracts did not allow sufficient audit rights, with some containing restrictive clauses to limit the scope of an audit.

And in 43% of the cases FirmDecisions looked at, access to relevant financial records was restricted by agencies – making it harder for an advertiser to check it has not been overcharged for media.

"Without full data access, it is possible that agencies have been charging advertisers for space that the agency group entities have received for free," the report said. Overall, it found insufficient rebate return clauses in 60% of contracts.

While the issue of overcharging and rebates is particularly topical – in the US, the ANA published a major report into the issue earlier this year (to which FirmDecisions contributed) and Dentsu in Japan recently admitted some clients had been overcharged – FirmDecisions also reported that "agency groups are now actively attempting to influence client's choice of auditor".

"Some agencies are trying to prescribe that the audits can only be done by a Big Four accounting firm," said David Brocklehurst, managing director/APAC at FirmDecisions.

"In fact, that may become the choice of the client. But, the client should not be limited to that choice."

Data sourced from Campaign Asia-Pacific; additional content by Warc staff