Few decisions are more important than an audit committee’s selection and evaluation of an external auditor. Ask these questions during the selection process:
1. Does your auditor have the right accounting and auditing skills for your business? Your auditor should have an exceptional grasp of both auditing and accounting standards, particularly as they relate to your industry, your company’s transactions and the types of financial and other instruments your company owns.
2. Does your auditor demonstrate an understanding of your business? The best auditors have a deep understanding of your business and how the financial statements tell your story. Seeing the linkage between your business operations and industry, and how the financial statements illustrate this connection, helps your auditor better identify the riskiest areas for possible misstatements.
3. Does your auditor possess the necessary communication skills? Your auditor may need to deliver challenging messages in a practical, complete way – and also may have to stand up to management pressure.
4. Is your auditor collaborative in an objective way? Your company needs to work with the auditor to be sure he or she receives the right information, analyzes it and reaches the proper conclusion.
5. Does your auditor provide insights into your business? Your auditor should sit down with you and tell you what he or she found, offer recommendations for improvement and share insights into the quality of your financial reporting process, accounting skills and even your business.
Credible, timely and relevant financial information is fundamental to promoting confidence in a company. Audit committees play a unique role in establishing and maintaining that confidence by choosing the right auditor.
Want to know more? Contact Mike Desmond to find out other points to consider when choosing an external auditor for your company.
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