Article Summary
- Your financial statement audit provider needs may change over time.
- Your provider may not have the depth and breadth you need.
- Evaluate if a firm is a good fit by knowing the right questions to ask.
Risk Mitigation Is Key
Financial statement audit providers differ significantly from one firm to the next. Sometimes needs change, firms experience turnover or billing surprises leave clients wondering how to proceed.
Collaborating with the right financial statement audit firm is essential. Asking yourself these questions can help you evaluate your current provider’s fit and determine if your organization needs to consider a different auditing firm.
You’ve Changed or Your Needs Grew
Your provider may not have the depth and breadth you need if you have grown significantly, entered new markets or added complex products and services in the past several years. Many clients switch when they’re looking for deeper expertise in specialized audits.
- Whether your provider is a large or small firm, do they have the expertise in-house for your audits?
Big, small and every firm in between could potentially be the right fit. The relationship, expertise and other unique strengths could tip the balance in their favor. One must-have is specialized audit expertise. Some firms merely ‘dabble’ in audits and lack consultants with the depth of experience that develops from auditing several hundred organizations. Find out what prospective firms’ strengths are and look for the right mix for your business.
- Have your systems, processes or compliance frameworks changed recently?
When you change significantly, your needs may change too. New fraud risks arise. Different regulations apply. You might find yourself needing different experience to support your business or expertise that isn’t in your provider firm.
- Are you entering a new industry, serving a new market or facing new regulatory challenges?
Industries differ in their challenges, capital use, expectations and in a myriad of ways that impact the knowledge and background needed to serve them effectively. This is especially true of deeply regulated industries such as healthcare and finance but applies broadly to every industry.
Your Provider Isn’t Proactive
With the right industry expertise and attention to your account, your provider should, ideally, proactively connect you with helpful advice and resources. Since regulatory change is nearly inevitable, their firm should help you feel thoroughly informed and ahead of pending change.
- Do you receive regular updates from your provider?
Your provider should reach out with information and check in when it’s appropriate, and not just when you need something and are expecting their outreach. You also shouldn’t have to chase them down to ask a question and they should return your calls and emails.
- What value-added services do you receive?
The engagement you have with your provider should make you feel like you’re genuinely impressed with their offerings. Ideally, the value and customer experience you receive should even surprise and delight you as a client.
- Do you collaborate with the partner who won your account for the firm or with a team they supervise?
Some firms assign clients to a different team after closing a deal, perhaps giving the account to accountants who are training to do the day-to-day auditing work while partners are involved with sales and initial consultations. Find out if your account is a priority for the firm and how much expertise access you can expect.
Communication is Poor
When you’re researching an audit provider, effective communication is one quality clients often rave about in reviews of high-performing firms. Effective communication with your auditor firm helps build confidence in their work. Your business should see transparency, responsiveness and communication clarity in interactions with your FS provider.
- Is it easy to reach your audit provider?
Your auditor should be accessible, especially when they’re conducting an audit for you, but also when you have questions.
- Are updates from the firm usually linked to auditing milestones, or do you also receive communications offering innovative ideas, guidance on best practices and suggestions you can implement?
You should hear more frequently from your firm than just receiving milestone updates on your audits. Ideally, they should help you stay informed on fraud prevention, risk management, regulatory changes and ideas from the auditing world.
- Are misunderstandings and oversights occurring?
Having a good rapport with your auditor can help contribute to the project’s success. Careful service and communication show you’re important as a client. If misunderstanding and significant technical mistakes occur regularly, this is a possible sign of a quality issue or major breakdown in communication. Sometimes, a business relationship just isn’t a good fit. This can be subjective but is a sign worth investigating and considering carefully.
Pricing and Value are Unbalanced
Pricing and value that differ substantially provide possible clues to a provider’s long-term strategy. Looking at what they offer you and comparing your contract with other bids may reveal whether their pricing is appropriate. A firm with a higher or lower price may not always be the best fit.
- Is the pricing significantly different than other firms for similar services?
Are fee disputes frequent? Did pricing change significantly after signing a second engagement or after a set time? Many firms, for example, submit what appear to be competitive bids, purposefully carrying a loss on an account to raise the price significantly on future engagements. If you are often haggling over price or seeing billing surprises, these may be signals of poor provider fit or long-term issues with the firm’s quality.
- If pricing increases, is the increase justified?
Price changes may reflect a real value increase or be part of a pricing model drawing in new customers with temporary low prices. Whenever your price goes up, take a closer look at the value you receive from the auditor.
Firm Turnover Disrupts Your Services
Staffing changes, mergers and disrupted culture fit from internal changes are common at accounting firms. Looking at your provider’s staffing can reveal how healthy the firm is and whether they’re in a good position to serve your needs effectively.
- Is your provider experiencing rapid turnover?
Some change in staffing is normal. High turnover could signal poor internal culture or be a sign of financial or leadership instability. Along with frequent staffing changes, firms with high turnover are frequently training new staff. Whenever a key staff member leaves the practice or no longer serves your account, the firm should diligently onboard replacements with the appropriate experience and expertise.
- Is the firm growing?
Growth is generally a positive sign and rapidly growing firms are often ambitious and client focused. A firm in decline might not have the resources to serve their clients or become desperate to expand their billings.
You Notice Serious Problems or Quality Concerns
Getting the technical basics right is essential for auditing firms. Quality is necessary. Big errors and oversights by your auditor have consequences and introduce risk where you want to avoid and mitigate risk.
- Has their service introduced errors?
A major accounting mistake is a good reason to carefully evaluate your relationship. Auditors who miss errors or falsely report deficiencies may create extra costs for you when you try to fix those mistakes. Inexperienced or cheaper auditors may not have what it takes to do a specialized audit properly, resulting in higher costs down the line that a knowledgeable auditor would prevent entirely.
Time for a Change? Ask These Questions
Prepare to find your new auditor with these questions to ensure you have a great fit and are ready to work effectively together:
- What’s your experience with clients in my industry?
A firm that works with clients like you can show a track record of success helping with financial statement audits.
- What is the onboarding experience like?
Ideally, they offer a streamlined client onboarding experience and are available to guide you through the process. Ask about what the first audit will look like from your perspective.
- What can I expect from collaborating with you?
This is their opportunity to showcase their client experience and what sets them apart from similar firms. Pay attention to the strengths they highlight and check them against your needs and priorities.
- How does your pricing and fee schedule work?
Keep in mind what you hear about typical pricing changes and how you can expect your engagement pricing to change with future audits.
Transitioning to a New Firm? Explore Your Options
Staying with the wrong accounting partner is risky. If you’re concerned about your financial statement auditor and want to explore alternatives, reach out to our auditing team today. See how our expert financial statement auditors provide assurance throughout the audit process.
