With constant reports of fraud in the news, companies are increasingly turning to independent auditors for additional assurance about their financial statements and internal control procedures, even though there is no external requirement for such assurance. Banks and investors are also requiring more companies to be audited. With these concerns and requirements, how do you evaluate and choose a potential auditor?
1) Auditor Independence
The first hurdle would be to examine the auditor’s independence. The auditor is required to be independent under guidelines established by the AICPA, in order for them to be objective and have professional skepticism.
2) Auditor Experience
Next, the company should evaluate the experience and special skills of the audit team and their experience in the company’s industry. Without industry-specific experience, auditors will not understand nuances of the company, regulations, and specific accounting requirements. Without these, the auditor may not be able to provide a quality audit or make beneficial recommendations to the company. During conversations with a potential auditor, the company should expect the auditor to ask questions specific to the industry and its environment to display their knowledge of the industry.
3) Auditor Resources
Finally, the company can consider the resources made available to the auditor, such as professional and membership organizations. Professional and membership organizations grant the auditor access to specialized expertise and information.
In order to avoid working with an inexperienced auditor, the company should obtain several bids for the audit, check professional references, and research the auditor firm’s reputation within the industry. If you’re interested in learning about the audit process at Anders, view our Audit and Assurance services or submit an RFP.
