Audits tell you what you’re doing right, what you’re doing wrong, and what you can do better. You don’t have to agree with everything in an audit, but it’s a really valuable tool.
Every client and situation is different. The more you know, and the more you know about your auditor, the safer you’ll be, and the more complete the final audit will be that you're presented.
Communication is key. Never be afraid to talk to your auditor or potential auditor. The more they understand your business, the more value your auditor can bring to the table. Below are 10 questions to ask prior to an audit to help ensure a smooth process for everyone:
1. How will you communicate with us during the audit process?
2. What do you know about our industry and what represents a healthy financial condition?
3. What auditing procedures do you plan to use to detect fraud?
4. How will you determine the effectiveness of internal controls?
5. What is the makeup of your audit team and who will manage the engagement team?
6. What methodologies will you use, and to what degree will you use sampling?
7. How will you analyze the data?
8. How will you determine if, or in what way, my business’s practices are resulting in unnecessary losses of money or inefficient use of resources?
9. How will you ensure I’m in regulatory, financial and tax compliance?
10. What have you done to improve your audit procedures over the years?
The answers to this list of questions (though not an all-inclusive list) will give you a better picture of what to expect from an auditing firm. Furthermore, the fact that you’re asking relevant questions will indicate that you know what you’re looking for, and why. That’s good for an auditor to know.
If you’re seeking a new audit firm, talk to several, and match one’s answers up against the other. An independent auditor is one of your most valuable business tools.