We know, both from our experience as external auditors (all of us) and years of experience working in private sector firms (many of us), that changing audit firms can be a painful process. NOTE: if you’re a current BerryDunn client, feel free to stop reading here. All kidding aside, here’s a recipe for making an auditor change that meets your needs and advances your organization.
You want to spend your time running your organization, not worrying about your new audit team. Here’s what you should do, and what you should expect from your auditors:
1. YOU: Let them down easy.
Assuming you still have at least a cordial relationship with your prior audit firm, let them know as soon as possible who will be performing your work in the coming year and the dates you would like both audit firms to meet. While sooner is better, balance your needs with the former audit firm’s schedules so they don’t charge you for rushed work and to make sure the right team members can be involved .
2. BOTH: Communicate frequently.
From the first planning meeting (schedule it early!) through delivering the final product, constant communication is crucial to working with your new audit team. Successful transitions happen because both auditors and clients are aware of ongoing issues, challenges, and opportunities. This saves you time and money. Scheduled update meetings and weekly notifications of engagement status are two methods used to easily communicate with all stakeholders. Daily check-ins during the audit can help remove many obstacles to an efficient transition.
3. AUDITORS: Work with the client’s schedule.
Planning meetings, document requests, and learning a bit about your business and any significant issues takes time from your team’s schedules. An audit firm who puts the client first will do everything in their power to schedule meetings and request material in a way that works around your schedule.
4. YOU: Prepare in advance.
In order to help your new auditing team hit the ground running and save time for everyone, work to compile important documents before onsite work begins. Some documents any audit firm will need include:
a. Permanent file documents, including: articles of incorporation, by-laws, debt agreements
b. Internal control system documentation
c. Listings for confirmations including banking institutions and legal firms consulted throughout the year.
5. BOTH: Meet regularly to measure progress.
Ideally you and your engagement manager should hold regular logistics and progress updates. Make leaders available—make sure the team has what they need to address significant issues immediately. Having a leader of the audit team onsite helps make decisions faster and the engagement more efficient. Talk in advance about meeting deadlines: both those of your staff and those of the audit team.
6. AUDITORS: If it ain’t broke, don’t fix it.
The audit team shouldn’t force different/particular formats on you for reconciliations or documentations—if what you have given your auditors in the past worked fine, then the new team should be able to work with the same formats. Your team will want to have access to the permanent files and general ledger structure/codes before auditors come onsite.
7. BOTH: Build strong relationships.
Both parties are hopeful that the effort put into the transition pays off in a smooth engagement, but also in many future years of working together. Both organizations benefit when you can relate to your auditors and they to you.
Communicating, planning, and remaining flexible are the foundation for any good business relationship. Setting expectations and being able to rely on the fact that your audit team knows your industry and can hit the ground running are essential to a successful transition. For more information, or if you have any questions, please contact me.