Financial ratios use data from your financial statements to provide indicators of financial performance, helping…
Organizations often go for many years with the same auditor, without considering if it may be time for a change.
In my experience, organizations typically raise two common objections when it is suggested that they engage a new audit firm. The first one is, “Our auditor knows/understands our organization”. The existing auditor may be familiar with your organization, but a new auditor brings a fresh perspective and therefore may offer greater value. The other common objection is “Our audits are always clean, so why would I change?”. This is related to the first objection – a new auditor brings a fresh perspective and may uncover issues that the existing auditor overlooked.
There are several compelling reasons to consider engaging a new auditor:
Improved auditor independence and objectivity
An auditor that has been auditing the same client for many years may forge personal relationships with staff or the Board and become too close to the client, losing their objectivity and independence.
Increased value arising from the fresh perspective of a different auditor.
A new auditor brings a new set of eyes and a fresh perspective, with the potential to see issues that the existing auditor may have overlooked. Hence a new auditor may deliver new insights and increased value to the audit process. Also, if auditors know they will be replaced, they may be more inclined to produce audit reports which demonstrate high standards and will want to avoid having any shortcomings exposed by the new audit team.
Ensuring Audit Cost is Competitive
Potential savings may result from periodically re-tendering the financial audit, or appointing a different auditor.
In a previous blog we discussed specific criteria to consider when selecting a new auditor, however here are three things that are often overlooked:
- Will there be staff continuity in subsequent years? This avoids the time and cost imposed on you and your staff of training auditors on your specific processes and procedures
- Does your final report need to be ready for a specific date? If so, ensure the audit firm can accommodate your schedule in its work plan
- For NPO’s and charities, consider including the preparation and filing of any required CRA returns in the price of the audit.
We often recommend implementing an auditor rotation policy to change auditors about every 5-7 years. This may involve changing audit firms, or perhaps keeping the same firm but changing the audit team that has been conducting your audits.
Find out more about engaging a new auditor – call me and we can have a conversation. We can also talk about improving operating efficiency, reducing costs and strengthening your organization. Reach me at 613-727-1230 ext. 212 or email@example.com