Choosing an auditor: 5 questions every business should ask
By Crystal Skotedis, CPA, CFE
Selecting an auditor to review your books, evaluate your business practices and make suggestions for improving your performance is akin to bringing on a business partner. It is vitally important to find the right fit. The auditor’s working style, experience, advice and timetable must meet your business’s needs and exacting deadlines.
Here are five questions to pose before you sign that contract:
- Can we meet the auditing team who will be working on the account?
You wouldn’t hire an employee without a face-to-face interview, so why would your company or nonprofit bring on an auditor without meeting the team?
Typically, an auditing team is overseen by a CPA manager or director. An in-charge accountant and various staff associates also conduct field work at the client’s business, poring over the books and records and interacting with the company’s managers and staff during annual auditing periods. This field work can range from a few weeks for small accounts to six weeks for larger companies. It pays to see how your business will mesh with the auditors.
Making a face-to-face appointment to meet the team will either confirm that you are making the right choice, or help you avoid a disastrous culture clash.
- How often and well do you communicate?
Auditing today isn’t simply about the numbers. These outside business professionals can offer sage advice that is the “secret sauce” of a great auditing partner.
Good auditors are alert, aware and watchful. They will benchmark your company against others in the same industry class. They will pass along research, advice and training information to improve your bookkeeping and financial controls. And they will catalog opportunities for operational improvements, pointing out potential efficiencies, human resources restructuring and department and systems improvements. Often, this advice comes in the form of an annual management letter, along with ongoing dialogue and contact.
Being on the outside looking in is a big advantage for a sharp-eyed, experienced auditing team and the company or nonprofit that hires it.
- What is the price and how is it calculated?
A bottom-line bid in response to your company’s request for proposals simply isn’t enough information to select an auditor. Unless you know how many working hours the bid covers, along with hourly rates, the lowest bid could end up costing you money.
Higher bids could cover more hours. And a low bid might not be a bargain if it’s calculated on too few hours to do the job well. Low bids also can disguise higher hourly rates that come back to haunt you once the team exhausts the bid and goes on the clock. To truly compare price, know all the variables.
- What is your experience with companies like ours?
An auditor’s experience factors heavily into price because it often determines how efficient an auditing team will be.
Does your company or nonprofit have 16 locations or one? The answer dictates two totally different audits. Is your business manufacturing or service-based, such as engineering? The auditing approach is night and day. What is your revenue? Do you have five divisions generating $100 million, or one division with a complicated transaction structure?
These details will impact the audit. Without practice in your field, an inexperienced auditor may burn many hours – and a lot of your money – getting up to speed.
- Can you meet our timetable?
The journey to the end product and the ongoing partnership between your concern and the auditing team are critical. You must all operate with similar timetables.
Some auditing firms love racing deadlines, bringing in the audit just under the wire. Should your company eschew suspense and prefer advance notice, choosing a deadline-driven auditing firm will keep your business humming.
Ask when the auditing team will be on-site at your business, and when the audit will be finished. Then, add those answers to the professional services contract.
Ensuring your auditing team holds similar philosophies regarding deadlines, communications and more is the best way to avoid delays, disruptions and frustration.
Crystal Skotedis is a director at Boyer & Ritter LLC where she provides auditing, accounting, tax and consulting services for a variety of nonprofit, governmental and private sector clients. She can be reached at 717-761-7210 or email@example.com