Everything (Almost) You Need to Know About Choosing an Auditor
Maybe your company has a business loan in which the terms of the bank loan’s covenants require a periodic audit. Or you’ve borrowed money through a private investor and the loan agreement mandates an annual audit. Or you’re thinking of selling your business or merging it with another firm.
In each of these scenarios, you need an auditor. So you do you go about choosing one?
Jeremy Morgan, a partner at Weiss & Company LLP, believes that responsiveness to the client is one of the most important traits to look for when choosing an auditing firm. “We encourage our clients to call or email the people they work with when they have questions. The person you contact may not know the answer to your question, but we have the resources to find out the answer and respond quickly, usually within a few hours.”
Allen Plenner, a colleague of Morgan’s at Weiss, suggests two other traits. “I believe an excellent commitment to customer service and strong communication skills are the two most important qualities you should look for in an auditor. Customer service is about being proactive instead of reactive. Communication is all about relationship building. Is your client comfortable picking up the phone and talking to you about whatever is on his or her mind? It’s all about building a rapport.”
Here are some suggestions about how to make a good choice.
- Know yourself. Think about what is most important to you. Do you want to work with someone who is responsive and easy to talk to, a known expert in your industry or some other criterion?
- Get names. You are looking for names and glowing recommendations. Ask for references and give them a call. If references are not available, that might be a warning sign.
- Check newsletters and websites of professional associations. If you have a networking social function coming up, go and ask there.
- Take notes or keep a spreadsheet. This will be essential later when you compare candidates.
- Spend time on due diligence. Focus on the top few names that keep coming up. Repeat mentions — positive and negative – are telling.
Once you have a few candidates you’d like to talk to in depth, here are some questions to ask.
- Stability or churn? Will you work with the same team members each year or will you be retraining junior staff every year?
- Industry familiarity. Do they know your business? While it’s not always essential to have hands-on experience, it can add efficiency to the audit process.
- Seniority. What levels of experience will my audit team have? Will you have supervisor, manager and or partner-level experience or mostly less experienced associates?
- Client Communications. What are their formal and informal touchpoints throughout the audit and beyond?
- Push them…just a bit. Ask them what they would do if they encountered an unfamiliar issue – how do they respond? Morgan makes sure to inform his clients that Weiss & Company is part of the BDO Alliance, a network that offers independent accounting firms specialized resources and experts.
When you have identified the firm you think would be a good fit for your company’s needs, review your notes and ask any necessary follow up questions.
- Understand billing, fees, and contractual expectations. Ask to see the typical fee structure you should expect. Remember to factor in the total value of what you will receive against the bottom-line number. In a service business, ‘least expensive’ rarely equals good quality.
- Make sure they fulfill the criteria you identified as being most important. Are you feeling good about your likely choice? (If not, go back to step 4 above.) If you are feeling good about the research you did and where you are netting out, call them and get the deal done!
There is a lot of work that goes into making a business relationship successful. By design, the work has to be two-sided. Suggest regular “check in” calls with the senior person responsible for your business to make sure things are going smoothly. Hopefully it will be the start of a fruitful business relationship. To learn more about what sets our auditors apart from other firms, contact our Weiss & Company LLP Audit & Assurance team.
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