Picking the right external auditor for your organization is a very vital decision. The auditors are like long-term partners for your firm, as they are the professionals with whom you will be working every year. These experts will be an important part of your company and prepare the base for its successes.
Therefore, the decision of appointing the proper auditor should not be glossed over or taken too lightly.
Business compliance isn’t the only thing you should expect from an external audit. The auditors should bring various other factors like qualifications, experience, and approach to the task.
This article explores the meaning of auditing and discusses some of the most important capabilities and qualities to look for in an audit company.
What is Auditing?
Simply put, auditing refers to audits of financial statements or an impartial examination and assessment of a company’s financial statements – typically performed by an external third party.
An audit is an important term in accounting, describing the examination and corroboration of a company’s financial records. The objective of an audit is to make sure that the financial information shown is fair and accurate.
Audits also establish that the financial statements are prepared as per the relevant accounting standards. The three chief financial statements are:
- Income statement
- Balance Sheet
- Cash flow statement
The company’s financial statements are based on the company’s operating, investing, and financing activities through various recorded transactions. Since the financial statements are prepared internally, it raises the risk of fraud by the preparers of the statements.
In the scarcity of appropriate principles and standards, those who prepare the statements can easily falsify their financial positioning to show the company as more profitable or successful than they are in reality.
Auditing plays an essential role in ensuring that companies represent their financial standing fairly, honestly, and according to accounting standards.
1 – Qualifications
The first and most important aspect you should check with the auditing firm you’re looking to partner with is whether the company has the right qualifications on paper. When an audit is performed to meet the requirements of an external regulator, it is pertinent that the lead audit partner is qualified enough to meet the requirements of the regulator.
For instance, if the audit is conducted to comply with ASIC requirements, it can only be conducted by a registered company auditor (RCA). You can easily check whether your auditor is registered by checking their details in the professional registers section of the ASIC website.
You can formally request proof of the auditor’s practice and qualifications that could certify that they can examine the documents required by your organization. They need to have an official external auditor license to audit the reports.
2 – Industry Experience
You should collaborate with a reputable company whose professionals are experienced in dealing with the same situations your business faces. It will be a very straight and easy operation if the auditor has an in-depth knowledge of your industry’s objectives and problems. Additionally, it will help your company save valuable time, cash, and resources.
The perfectalliance would be with a company that is experienced in dealing with the same situations that your business faces. The entire auditing process will be more forthright if the auditor is well-aware about your industry’s goals and problems, and your organization will therefore, save time, resources, and effort.
The auditor’s experience within your industry will most usually translate into a more effective audit, and the questions would be very relevant to your line of business. Further, It will also enable them to offer more applicable value-added services and turn their analysis into concrete steps that your business can put into action.
3 – Reputation of The Auditing Company
Testimonials, awards, and references give a good idea of an audit firm’s reputation in the industry. Their merit and worth should be apparent to you. There is no guarantee that your auditing process will go ahead smoothly if you join hands with a newly founded firm or are in a growth stage. What’s worse is that your company’s audit wouldn’t be accepted without a bit of doubt. An enterprise with an established name and proven expertise would mean you’ll be hiring an expert that has established high-quality levels for auditing. You should read their reviews on several websites and make an informed decision.
4 – Proficiency in Technology
Technology and data analytics have transformed auditing from a few years ago. If your auditor does not use those tools while conducting your audit, you will miss some deeper understanding of your business.
Technology and software applications used for auditing can feed on volumes of data across huge organizations, finding errors far more quickly, leaving the auditors free to review the findings, do the data crunching, and concentrate on their implications on the business. That would mean that you receive more hands-on advice and action items relevant to the future to improve the operations of your business.
5 – Always ensure you negotiate for best results
Partnering with an audit company is exactly like a business deal. Like other business transactions, you should negotiate with the auditor’s company and ensure you get the best value for your organization. If your auditor fees aren’t fixed, you could look around and select an audit company offering the best rates, it should add great value, and the process should be transparent.
Choosing an auditor to assess your company’s finances shouldn’t be a burdensome task. The quality of audit you will receive will depend on your auditors’ experience, decisions, and even personalities. You need to look for a skillful and dependable firm providing several assessments, and that company should know your industry. When your organization depends on a single enterprise for certifications each year, the audit work can be completed smoothly and without any error. If you are searching for an efficient and reliable audit company, kindly get in touch with Strothman+Co.