Auditor selection: A critical process for a successful partnership
May 4, 2023
Engaging an auditor is ultimately the responsibility of an organization’s leadership. But choosing an auditor can be a daunting task. How does leadership even begin when tasked with such an important decision? Often the relationship an organization has with its auditor is one both parties wish to keep for years to come. Therefore, making the right decision is paramount.
To help you find and select the right auditor for your organization, here are some tips for searching for and evaluating potential auditors.
Where to begin your search for an auditor
The first step to selecting an auditor is identifying which individuals or public accounting firms are qualified and available to perform the work. Here are some suggestions on how to perform this search:
- Check with your state’s CPA society or accountancy board. Both are a good source of information on CPA firms and individuals licensed within your state. They may even be able to provide details on members in good standing or any outstanding sanctions.
- Reach out to industry associations. Auditors who are knowledgeable about an industry and interested in learning more will often participate in industry associations by attending events or even becoming associate members.
- Ask for recommendations from peers within your industry or similar industries. Getting a recommendation from another company is a great way to get started. What’s more, a peer relationship will often give you then chance to have an open and honest conversation regarding your colleague’s experience and day-to-day partnership with an auditing firm.
- Talk to other service providers you currently use. Often other professionals, such as attorneys, financial advisors, and bankers have experience with a variety of audit firms and may be able to provide suggestions.
How to evaluate potential auditors for your engagement
Once you’ve identified potential auditors, you’ll need to evaluate them prior to making an engagement decision. Here are five questions to ask when evaluating a potential auditor:
- Do you or your firm have the qualifications, experience, and expertise necessary? Things to consider when evaluating an individual or firm’s qualifications include:
- Assess the individual or firm’s reputation
- Gather responses from references
- Determine their understanding of accounting and auditing requirements for your particular industry
- Obtain a copy of their peer review report
- Read resumes of individual CPAs who will be performing the work
- What is the cost for the audit and any other services required? While your company’s decision-makers will want the cost to fit into the organization’s budget, the fees should be reasonable to ensure that they will not adversely impact the quality of the audit.
- Are you or your firm independent with respect to the organization under generally accepted auditing standards, or do you or your firm have any conflicts of interest?
- What is your or your firm’s approach to providing audit services? Intangibles such as customer service, ongoing support, effective communication, and developing a team approach are critical in fostering a positive relationship your organization and its auditor. Setting expectations for these early on will ultimately lead to a more successful audit experience.
- Do you or your firm have the capacity and ability to meet any statutory deadlines or internal timing requirements of the organization?
One bonus question for consideration: How do you or your firm leverage technology and cyber security to not only make the audit more efficient, but also to keep your data secure?
Choose your auditor with confidence
Selecting an auditor is an important task that should not be taken lightly. Asking the right questions and considering the most important items throughout the engagement process can lead to the best decision for your organization.
At Abdo, we understand how overwhelming it can be to search for an auditor. If you have questions or would like to know more about our audit approach and process, we’re here to help!
In the meantime, if you’d like more information on selecting an auditor or creating a request for proposal, consider reading the American Institute of Certified Public Accountant’s (free) guide titled “Hiring a quality auditor: Your guide to the selection process.” You can access the guide at this link.