Auditing is an essential part of budgeting and forecasting, but it can also be a stressful and challenging process. How can you make it easier and more productive for both you and your auditors? Here are some tips on how to build a strong relationship with your auditors that can benefit your business and your career.
Your auditors are not your enemies, but your partners in ensuring the accuracy and reliability of your financial statements and projections. They have a professional and ethical duty to follow the standards and regulations of their industry and to provide an independent and objective opinion on your financial situation. Therefore, you need to understand what they expect from you, such as the scope, timeline, and deliverables of the audit, and what you can expect from them, such as the level of communication, feedback, and support they will offer.
The auditor has to be independent. Hence, neither it should be an enemy nor a partner. Because in both ways, he loses his essence.
Auditors play a critical role in the effectiveness and quality of the financial markets and the financial reporting system. They perform an oversight of the system of governance too. This is all very onerous a responsibility. Their expectations from an audit are also to ensure there is an overall compliance with laws and regulations. Therefore, they seek evidences, examine various records etc. This understanding is crucial because it provides the basis for addressing these expectations. It becomes the management’s primary responsibility to ensure the integrity of the financial system and address auditors’ expectations accordingly.
Not an ideal objective from a Corporate Governance perspective. You should not be "friends". Just ensure a normal working relationship.
Statutory Auditors need to remain independent. Strong relationship would mean understanding objective of audit and providing cooperation and support to let them carry out their procedures to achieve ultimate goal of arriving at the opinion on true and fairness of financial statements. Certainly there is a gap between WHAT management, regulators and society is expecting and WHAT auditors are doing, which needs attention.
Here are my two cents as an auditor of more than a decade’s experience- auditors transcend mere checklist requirements, serving as strategic partners essential for navigating checks and balances. Whether in internal or external audit function roles , they assess risks and offer recommendations, emphasizing the need to view them beyond a cost center. Fostering a relationship with auditors involves embracing differences of opinion with mutual respect and a shared understanding of the audit requirements.
One of the best ways to show respect and cooperation to your auditors is to prepare and organize your data and documents in advance. This will save time and avoid confusion and frustration for both parties. You should have a clear and consistent system of recording, storing, and retrieving your financial information, such as using a cloud-based software or a shared folder. You should also have a checklist of the documents and reports that your auditors will need, such as invoices, receipts, bank statements, contracts, budgets, forecasts, and policies. Make sure to label, date, and verify your documents and to provide explanations for any unusual or significant transactions or adjustments.
During the course of the year, ensure a good audit trail is maintained for all transactions and make this a habit for the team to be familiar with. Conduct random data transaction checks. This will save time when the auditors arrive! Organize docs in a cloud folder or shared software and create a folder for the auditors. Make a checklist for invoices, receipts, statements, contracts, budgets & policies. Label, date & be avsilable to explain unusual transactions. Assign a resource to assist with the audit process and make sure they know what is expected of them with regards to timeliness, efficiency and professionalism when dealing with the auditors.
Preparing and organizing all the required data and documents demonstrates professionalism. Which will not only smooth the auditing process but also reflects the commitment to a transparency and efficiency also the professionalism of the client (accountant)
If you are working with the same audit company/person from year to year, try to be consistent to what has already been shown and the structure of how it has been presented, to make sure that there is little effort to catch up on all the changes. This will make the whole process seamless and less stressful.
This approach not only shows respect and cooperation towards the auditors but also reflects well on the organization’s professionalism and readiness, ultimately contributing to a smoother and more efficient audit process.
In planning and with knowledge of the business, the auditor must prepare his information requirements for tasks to be performed; therefore, the delivery of information by the Company allows the auditor to perform his work efficiently and effectively. The delivery of the required information and that which is needed for the audit process is necessary; current tools allow monitoring the timely delivery of information for both the auditor and the company; without information there is no work and therefore the objectives of both parties, client and auditor, cannot be met.
Communication and collaboration are key to building a strong relationship with your auditors. You should establish a regular and open communication channel with your auditors, such as email, phone, or video call, and update them on any changes or issues that may affect the audit. You should also be responsive and respectful to their queries and requests, and provide them with the information and access they need in a timely manner. Moreover, you should view your auditors as a valuable source of feedback and advice, and seek their input and suggestions on how to improve your financial processes and controls.
Recognizing auditors as valuable partners is crucial because they offer more, than a compliance check. Actively seeking their input and suggestions on how to enhance processes and controls demonstrates a commitment to continuous improvement. By viewing auditors as advisors than regulators you can tap into their wealth of expertise which can greatly contribute to refining your financial practices. Establishing a relationship, with auditors requires effort. It involves timely communication respecting their expertise and adopting a mindset that values their input. Also transforms auditors into valuable allies in improving and optimizing financial practices.
Making sure to have a clear communication and collaboration throughout the auditing process and providing the necessary information, and engaging in an open discussion leads to enhancing the mutual understanding and ensures to have a smooth workflow
While you want to have a friendly and cordial relationship with your auditors, you also need to respect their independence and professionalism. You should not try to influence or interfere with their work, such as by withholding information, hiding errors, or offering incentives or favors. You should also not take their findings or recommendations personally or defensively, but rather as an opportunity to learn and grow. Remember that your auditors are not there to judge or criticize you, but to help you comply with the rules and standards of your industry and to enhance your credibility and reputation.
An auditor is a professional. Unlike the family doctor, he is not a friend because he has onerous responsibilities to fulfil as a professional. “Mutual trust” only means the auditor can be trusted to do what is right as opposed to saying the auditor can be trusted to “help” the client when in difficulty.
Maintaining transparency and honesty is key. Auditors rely on accurate and complete information to perform their duties effectively. It's crucial to respect their independence and maintain professionalism.
Acknowledging and respecting any parties establishs a foundation of trust and respect and the same goes for the auditors by recognizing and respecting their independency and professionalism, which will allow them to perform their duties objectively and neutrality.
Finally, you should appreciate and acknowledge the work that your auditors do for you. You should express your gratitude and recognition for their efforts and contributions, such as by sending a thank-you note, giving a positive feedback, or providing a testimonial. You should also maintain a long-term and mutually beneficial relationship with your auditors, such as by keeping in touch, referring them to other clients, or inviting them to networking events. By showing your appreciation and acknowledgment, you can foster trust and loyalty with your auditors and increase your chances of having a smooth and successful audit in the future.
Expressing genuine appreciation of the auditors efforts and their contributions reinforces a positive atmosphere, motivating them to deliver their best work and fostering a collaborative and appreciative working relationship