Can You Rely on Your Auditor?
With more than 138,000 accounting firms in the United States, making sure you select a reliable auditor can be quite a task. There are several questions you should consider asking when evaluating your current audit firm or selecting a new audit firm for your organization.
Are your auditors independent?
Rule 101 of the AICPA Code of Professional Conduct and Bylaws require that “a member in public practice be independent in the performance of professional services”. Determining that your auditor meets required independence requirements is one of the most important factors to consider. The AICPA requires partners and all professional employees of a firm be independent in mind and appearance. AICPA defines independence of mind as “ the state of mind permits the performance of an attest service without being affected by influence that compromise professional judgment”. AICPA defines independence in appearance as “the avoidance of circumstance that would compromise the integrity, objectivity or professional skepticism of a firm or member of an attest engagement team” had been.
Do your auditors’ possess the proper experience and qualifications?
Working with an auditor whose background and experience matches your needs can help ensure your audit will progress effectively and efficiently. Not only does the firm need overall experience, but also an understanding and experience in providing services to your specific industry (not-for-profit, construction, health-care, etc.). The following are some quick tips for assessing your auditors’ experience and qualifications:
- Make industry specific inquiries of your audit team to determine they have an overall knowledge of your industry to provide your organization with the best service
- Request comparable references from the firm’s client list
How well do you know your audit team?
Typically, the engagement partner is the face of client relationships and business development. However, there are several layers to the staffing of an audit engagement. The staff, supervisors, and managers are the employees who will be working with your organization on a day to day basis throughout the engagement. Before selecting a firm, you should become comfortable with the staff, supervisors and managers who will also be working on your audit engagement and determine that your team is comfortable with having a long-term working relationship with all members of an audit team. It is also important to determine which member of your audit team will be performing which functions of the audit and who your primary contact will be.
Have your auditors’ become complacent?
As experienced by the Academy Awards this year, complacency in your audit team can lead to major issues. A few questions you can ask yourself to determine if your audit team may be getting complacent are:
- Are the samples, inquiries, and procedures the same every year?
- Does the audit team remain up to date with upcoming accounting standard updates and regulatory changes that may have an effect on the organization?
- Have the audit team members remained the same every year?
- Could a “fresh pair of eyes” provide your organization with better service?
While these questions may only cover a small part of the selection process, they provide suggestions for your procurement of a reliable auditor. Keep in mind, your auditor should also serve as a trustworthy resource of information; from accounting updates to best practices, your audit team should have invaluable ideas on how to improve your financial reporting system and strengthen internal control processes.
Minnie Cariaga is an audit manager in the government/non-profit practice and has over 11 years of experience in the accounting industry. She will be attending the upcoming GFOAT Spring Conference this April. Connect with Minnie on LinkedIn or via email.
Ashley Garcia is an audit senior in the government/ non-profit practice. She will also be attending the upcoming GFOAT Spring Institute this April. Connect with Ashley via email.