Auditing companies provide various audit services, from financial audits to inspect and verify the accuracy and quality of accounting reports to internal audits focused on efficiencies, performance monitoring or identifying opportunities for improvement.
Many businesses assume that an auditing firm is purely responsible for preparing mandatory accounts audits. Still, an internal audit can be a valuable exercise in many scenarios, helping owners and decision-makers understand the bigger picture and analyse their operations with professional insights and assessments.
Hiring an auditor can seem a complex undertaking since their skills, accreditations and knowledge of your trading sector will influence the cost, duration and efficiency of the audit process. Here, we run through some tips on what to look for and what to expect from a capable auditing team.
What Does an Auditing Company Do?
An audit is an external examination by an independent professional. In many cases, the audit is financial, whereby the auditor or team of auditors, depending on the scope and size of the task, will publish their opinion as to whether the company accounts and financial reports reflect a true and fair picture.
They will look at various elements of reporting, such as calculations and estimates used for:
- Assessing and reporting on profits and losses.
- Recording and reporting balances owing.
- Valuing company assets and liabilities.
Audits follow a prescribed set of procedures and are governed by auditing standards that every qualified auditor must follow. The outcome of an audit is a report which explains the work undertaken and the conclusions drawn.
All listed businesses and many other limited companies are obligated to organise audits of their accounts, and many others conduct internal or professional audits or may require a financial advisory audit as part of their governing documents.
Different Types of Company Audits
As we’ve mentioned, a financial audit is just one type of audit process intended to provide an independent assessment of the accuracy of the published financial accounts. An external audit may be used by stakeholders, shareholders and third parties to make decisions about company investment, for example.
Compliance audits, also known as regulatory audits, are different and concentrate on a review of the businesses’ adherence to specific guidelines, reporting requirements or regulatory standards, where the auditors need to have an in-depth knowledge of the applicable regulatory framework and legislation.
Operational or internal audits differ again and assess how the business operates and is run, whether a targeted exercise to find ways to improve productivity and profitability, or a wider-scope overview to identify areas for improvement or assess emerging business risks.
What Should a Business Look for in Hiring an Auditor?
The starting point is to consider what you want to achieve through your audit – which will necessarily depend on whether you are commissioning an independent third party to produce an operational audit or need to audit your accounts as a mandatory exercise.
Auditors aren’t there to find mistakes or show up any errors made. They work as long-term partners who can get to know all the ins and outs of your business and help you succeed while side-stepping potential issues you may be unaware of.
Independent audit assessors can be invaluable assets, and any auditing firm you consider should have formal qualifications and accreditations certifying their ability to perform the required audit tasks.
UK auditors should be chartered accountants with membership in a body such as the Institute of Chartered Accountants in England and Wales (ICAEW) or the Association of Chartered Certified Accountants (ACCA). Compliance auditors may have additional accreditations issued by trade bodies or regulatory organisations.
Comprehensive Audit Services
Companies likely to require several auditing services can make cost savings and sometimes reduce the time span of each audit by working with an audit provider that covers their full range of needs, for example:
- Year-end accounts audits
- ISO certification audits
- Regulatory audits
- Internal and process audits
- Tax audits
- Data management and GDPR audits
An auditor with existing knowledge of your company and trading structure will normally be able to conduct further audits quickly without needing to work through the familiarisation process again to understand your business model.
Audit firms with greater capacity are also better suited to groups of companies, where an auditor can conduct individual audits of each entity, combined with group audits to cover each operating section, branch, or subsidiary in a wider group of related businesses.
Audit Company Reputation
The outcomes of an audit rely on your auditor’s integrity, skill and credibility. Hence, an established firm with recognised qualifications or accreditations and a trusted professional opinion is vital.
Auditors without the requisite expertise may not be able to conduct an audit in your expected time scale, and the audit report, setting out their opinions, findings and conclusions, may not be readily accepted.
More specifically, an auditor with experience working in your sector or with similar-sized businesses is preferable since an underlying understanding of the goals, challenges and pain points within the industry will contribute to cost savings, faster onboarding and better-informed advice.
Auditor Communication Skills
Finally, any auditing provider you choose to commission should have excellent communication skills and be engaged in dialogues where they can ask questions, provide suggestions, broach potential complexities and discuss the next steps in an open format.
While the auditor’s primary role is to reach conclusions and offer an independent opinion, it is likely the business owner will liaise with the same auditor each fiscal year to audit their statutory accounts and when they require any other services.
Your auditor, or audit team, should be somebody you are comfortable working with, be responsive to understanding your objectives, and be happy to provide clarity and guidance to select the appropriate actions in response to their findings.
Some businesses also use an audit committee to vet and select the firms they feel are the best match for the company, depending on the types of audit required and how often, comparing costings, expertise and reputation.
While many businesses view audits as a burden, working with a high-quality auditor can be highly beneficial in adhering to mandatory requirements and ensuring you have an excellent overview of your business.