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8 tips on how to pick the right auditor for your business
- 2 September 2024
- by BG Private
- 6-minute read
An auditor plays a crucial role in assessing the financial health and compliance of your business, so it’s critical to select the right auditor. Here are eight tips on how to achieve the best fit for your own company or not-for-profit entity.
1. Understand your business needs
Before you start searching for an auditor, it’s important to assess your business’s specific needs. Are you an NFP that needs an audit for ACNC compliance purposes or for grant acquittals? Or are you a larger company with a complex financial structure that requires a thorough and specialised audit?
Identifying the size and scope of your company’s audit needs will help you narrow down the search to an auditor who has the relevant skills and experience.
For example, if your company operates internationally, you may require an auditor with expertise in cross-border issues, consolidations and global financial reporting. On the other hand, a small or medium-sized business might need an auditor with experience in industries like yours. Meanwhile, an NFP is likely to prefer an auditor with experience in the audit requirements of not-for-profits.
Tip: Define your needs clearly before you begin your search, and make sure the auditor has experience in your specific business type and size.
2. Look for relevant industry expertise
Not all auditors are created equal. Some have a broader generalist focus, while others specialise in specific industries. It’s important to choose an auditor who understands the nuances of your industry, as this expertise will ensure that they can identify potential risks and compliance issues specific to your sector.
For example, if you run an NFP, you may need an auditor who is familiar with Australia’s not-for-profit accounting standards. Similarly, a business in the healthcare sector will benefit from an auditor who understands healthcare regulations and billing practices.
Tip: Look for auditors who have experience working with businesses in your industry.
3. Check qualifications and certifications
When hiring an auditor, you may consider asking about their qualifications and certifications. Membership of professional bodies such as CPA Australia or CA ANZ will demonstrate a sound training and the commitment to continuous professional development, but most corporate and NFP audits require a Registered Company Auditor to be in place. This can be checked online via the ASIC register.
Tip: Ensure that the auditor is appropriately qualified by checking the relevant professional registers.
4. Review their reputation and experience
A reputable auditor with a proven track record of quality work is more likely to deliver accurate and reliable results. You can assess an auditor’s reputation by checking references and testimonials, or even consider researching any disciplinary actions taken against them.
Ask probing questions about the auditor’s experience, and seek references from their existing clients if appropriate. A well-established auditing firm or individual will have experience in managing various clients, dealing with complex financial matters, and providing expert guidance.
Tip: Look for auditors who have a solid reputation in the industry, and don’t hesitate to ask for client references or case studies.
5. Assess communication and rapport
The audit process can be complex and sometimes stressful, which makes effective communication between your team and the auditor essential.
When choosing an auditor, consider their ability to explain complex financial concepts in simple, understandable terms. A good auditor should be able to communicate findings, concerns, and recommendations in a way that makes sense even to non-financial stakeholders.
Beyond technical skills, it’s important to assess the auditor’s level of professionalism and the rapport they build with your team. Working with an auditor is often a long-term relationship, so you’ll want someone who is approachable, reliable, and willing to collaborate.
That’s not all. Finding an auditor who is responsive and returns your phone calls and emails promptly will help ensure the project stays on track. You can assess this during the proposal phase – how responsive is the potential auditor during the tender process?
Tip: Choose an auditor who communicates clearly, listens to your concerns, and makes you feel comfortable throughout the audit process.
6. Evaluate the scope and cost of services
While cost should not be the sole determining factor in choosing an auditor, it’s important to ensure that the auditor’s fees align with the scope of services you need. The cost of an audit can vary greatly depending on the size of your business, the complexity of the audit, and the experience of the auditor.
Be sure to request a detailed proposal that outlines the scope and timing of services, and the fees involved. This will help you avoid any unexpected costs or surprises down the road. Keep in mind that while opting for a cheaper option may seem appealing initially, it may not offer the depth of expertise or the thoroughness you need.
Tip: Get quotes from different auditors as a comparison, and ensure you fully understand the scope of services included in their fees.
7. Assess availability and proximity
Timeliness is crucial in auditing, as delays can impact your ability to make critical financial decisions or comply with regulatory deadlines.
Before hiring an auditor, make sure they have sufficient resources and capacity to meet your timelines. This is especially important if you are under tight reporting deadlines or need an audit completed by a specific date.
It’s also worth considering the auditor’s ability to handle any unexpected challenges or issues that may arise during the audit. Can they adapt quickly to changing circumstances, or do they take too long to address concerns?
Proximity can also be an important factor. Is the auditor in the same city as you, and are they willing to travel to your location as needed? Or can the audit be completed remotely?
Tip: Ensure that the auditor can meet your timelines and has the resources available to handle your audit efficiently.
8. Understand how they use the latest technology
Choosing an auditor who uses up-to-date technology, including AI, data analytics, and cloud-based tools, is essential for ensuring a more accurate and efficient audit process.
Modern auditing technologies, such as advanced data analytics, allow auditors to analyse large datasets in real-time, providing deeper insights into financial performance and identifying anomalies or risks faster than traditional methods. Cloud-based solutions enable seamless collaboration, secure document sharing, and access to real-time updates, while AI can automate repetitive tasks and detect complex patterns.
By incorporating these cutting-edge tools, auditors can offer a more thorough, reliable, and timely audit, helping businesses stay ahead of evolving regulatory requirements and industry standards.
Tip: Before engaging an auditor, ask about the various technologies they use, and how these help make your audit more accurate and efficient.
Warning signs
- Lacks relevant industry or business type/size experience
- Doesn’t have a big enough team to service your needs
- Is not free from conflicts of interest with your company or key personnel as this could compromise their objectivity
- Is not communicating clearly or is not responsive during the tender process
- Cannot provide client references for entities that are similar to yours
- Has failed to stay up to date with current regulations and auditing standards as these change frequently
Contact us!
Our Audit & Assurance division welcomes to opportunity to speak to you about you audit requirements.
