(Originally posted 02/09/2018)
Small to mid-sized businesses and nonprofits often hire CPA firms or other external auditors to ensure the integrity of their financial statements. Generating an accurate audit—one that you can depend on–is a rigorous, multi-faceted task. Unfortunately, not all auditing providers are equally qualified or experienced.
An inaccurate or incomplete audit may leave you—the company’s owner—exposed, because you are ultimately responsible for your financial reporting.
You don’t need an audit telling you what you want to hear; you need an audit that tells you what you can’t afford not to hear.
Your bankers, investors, creditors, and other outside parties don’t care how you obtained an erroneous financial statement; they only care that you gave them bad information.
To be confident in the auditing process, you should thoroughly vet your external auditors prior to engaging their services. It’s important to evaluate the qualifications and performance of the audit team, the quality and candor of the auditor’s communications, and the auditor’s independence and objectivity.
A quality firm will assure you a detailed, timely, comprehensive report – and may bring valued-added benefits like recognizing opportunities for operational improvement, offering frank and informed responses during face-to-face meetings, and delivering access to sophisticated guidance and specialized services.
We suggest that you use the following questions to determine the quality of an existing or prospective external auditing firm:
- Does the audit team understand your organization’s business and how various economic environments and trends can impact your company?
- Does the firm have the industry expertise and geographical reach to serve your organization?
- Does the firm demonstrate its independence?
- Does the firm have a process for overseeing audit quality, to ensure that standards are met, and methodologies are followed?
- What do the audit firm’s references say about the audit team?
The audit process isn’t only about numbers. The experience and judgment of your auditing team can impact the quality of the audit they will deliver.
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