What factors should be considered by an auditor before audit of a company?

Given that a recent Standish Group Report found that as many as 53% of projects will suffer from poor planning, budgeting, and resource management, how can you make sure you implement a system that succeeds, one that embeds your business processes, provides meaningful data, improves productivity, and—most importantly—meets your business objectives?

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1. Define success
2. Prioritize your needs and wants
3. Identify and document your desired business processes
4. Ensure you have the right stakeholders with the right skills—and the right authority
5. Communicate, communicate, communicate!
Criteria for choosing an auditor
What factors should an auditor consider before accepting a company as an audit client?
What are the factors to be considered by the auditor in planning their audit?
What steps should an auditor take before start of audit?
What are 3 factors to take in consideration when choosing who will audit?

As a practitioner in Audit Management Solutions and Implementations, here are five key success factors I would recommend you consider:

1. Define success

It may sound obvious, but many projects begin without a clear definition of success. Take the time to determine what is driving your implementation and what you expect to achieve in business terms. Define how you will measure your results. Ask yourself this question: If everything goes well, what will things look like a year from now…and how will you know whether you are successful?

2. Prioritize your needs and wants

Regardless of the Audit Management system you have selected, there are undoubtedly numerous configuration options. Too often, organizations get caught up in the features and functions rather that starting with a business perspective. Take the time to ask yourself these questions. What is critical to you and your organization? What speaks to your strategies and operational processes? These will be the areas to focus on. And remember to think about what will make everyone’s lives simpler; simplicity means better user adoption, an important factor in long-term success.

3. Identify and document your desired business processes

Software systems enable business processes, and the best Audit Management systems provide great flexibility in implementation. Most can handle reasonably complex business processes. The success of your project lies in making sure that the processes you want are properly configured in the system and the best way to do that is to design and document those processes prior to the system implementation. And then, design, configure and document your “future state”. Take advantage of the opportunity to transform your organization by reviewing and improving processes that add the most value.

4. Ensure you have the right stakeholders with the right skills—and the right authority

Successful projects always focus on engaging with the right people at the right time. The Standish Group Report listed “User Involvement” and “Executive Management Support” as the highest-rated factors for success across any implementation project! Make sure you have committed executive sponsorship, strong project management, team members with the necessary technical and business skills, a broad approach to gathering feedback and input from those who will be using the system regularly, and a defined process for making decisions.

5. Communicate, communicate, communicate!

While often a cliché, the importance of communication cannot be overstated: the more you effectively communicate how and what the project team is doing, the project objectives, and the value to the organization, the more likely you are to succeed—particularly in the critical area of user acceptance. The best project teams communicate early and often, informing stakeholders frequently, consistently, and clearly.

While the above five factors are critical to success, there is one other compelling point to make: overall ownership and accountability—from everyone involved—is fundamental for project success. Your new Audit Management system is an investment—not only in time and resources, but in the future of Internal Audit within your organization. Gaining commitment and dedication from your stakeholders and project team is a sure path to meeting your overall objectives and the long-term success of your Audit Management solution.

Choosing the right external auditor is an important decision. You’ll work with your external auditors year after year and their insights are likely to be integral to your organisation’s success. How do you choose the right auditor?

An external audit should deliver much more than business compliance. To really add value for your business, auditors must bring the right combination of qualifications, experience, technologies and approach to the task. Here are some capabilities that you should look for.

Criteria for choosing an auditor

1. Qualifications

When an audit is conducted for the purpose of meeting an external regulator’s requirements, it’s essential that the lead audit partner meets the conditions that the regulator requires. For example, if your audit is to comply with ASIC requirements, only a registered company auditor (RCA) can conduct your audit. To ensure your auditor is registered, you can check their details in the professional registers section of the ASIC website.

2. Industry experience

If your auditor has experience within your industry, it will typically translate into a more efficient audit and avoid generic questions being asked. It will also enable them to provide more relevant value-added services and translate their analysis into concrete actions that your business can take. Continuity of audit staff working on your organisation’s audit will also enable a more efficient audit year-on-year.

3. Use of technology

If your auditor isn’t using technology and data analytics to perform your audit, you’re missing out on important insights into your business. Technology can digest entire data sets across large organisations, more quickly finding anomalies and freeing auditors to assess their findings, interpret the data, and focus on the business implications. This means you’ll receive more proactive advice and future-focused action items to improve your business operations.

4. Quality assurance processes

Any auditor you choose should be able to demonstrate how they ensure their professional service quality – their compliance with relevant legislative requirements, auditing standards and reporting best practices. For example, are regular peer review procedures in place? Do the audit partners and staff attend regular technical training, professional development in-house and externally?

5. Reasonable fees

When choosing an auditor, the fee is often a key decision factor. However, ASIC has emphasised that it is important for business directors to ensure the audit fees are adequate and don’t have the potential to adversely affect the quality of the audit. I have come across cases where financial reports are held out to be audited but the auditor was either not a registered auditor or the ‘audit report’ issued was not the correct report to meet regulatory requirements! You do get what you pay for.

6. Reputation of the audit firm

Testimonials, references or awards are a good indication of an audit firm’s reputation in the industry. For example, the Australian Financial Review Client Choice Awards are voted by executive level clients of audit firms such as directors and senior management and reflect your peers’ opinion of the services received. Accru is honoured to have received The Australian Financial Review Client Choice Award for four consecutive years.

7. Ongoing support for decision-making and growth

A good auditor is also a business advisor in regular contact with you throughout the year to bring to your attention matters that are relevant to your business. Agile decision-making often demands real time data. This is where your auditor can help. Additionally, audit firms who are part of a global professional network can add value further down the track when you decide to expand your business internationally.

While external audits are a regulatory necessity for some entities (see below), a good external audit delivers more than business compliance and reporting results of past financial measures. Your auditor should be a business partner who is able to provide deep analysis, assurance and future-focused business advice. After all, there is a reason that a windshield is so much larger than a rear-view mirror!

Read our article Can an audit actually benefit your business? to find out more about the benefits.

Accru auditors naturally strive to excel in all the above areas and deliver audit outcomes which exceed clients’ expectations. Please contact us if you would like to know more about how an audit could benefit your business.

What factors should an auditor consider before accepting a company as an audit client?

Client acceptance evaluation should include General Considerations, Management Integrity, Management Commitment to GAAP, Management Internal Control Consciousness, Financial Strength of the Client, and Other Risk Factors.