To get the most out of your company’s year-end audit, you need to view your CPA firm as a long-term partner and not just as a commodity that provides an audit opinion.
“If you’re just looking for a commodity, you’re always going to be disappointed with what’s delivered,” says Michael Benjamin, a partner in the assurance services practice at Burr Pilger Mayer. “But if you’re looking for a long-term partner, you’re going to be a lot happier. You should look for a firm that really wants to partner with you, that understands your business and your risks and that wants to take the time upfront to get to know your company.”
Smart Business spoke with Benjamin about how to get the most out of your CPA firm to ensure a successful year-end audit.
How should a business approach a year-end audit?
Audits should be viewed with a team approach, as a partnership between your company and your CPA firm. Too many businesses tend to look at it as a process that happens to them, and instead, they should be looking at it as a process that they participate in and have control over.
Part of that is meeting with the engagement manager of the audit firm before the end of the year and really making sure that the audit firm understands your business and the risks that your CFO sees in the day-to-day of running your business. The auditors should audit through the eyes of your company, meaning that they need to understand your company, should want to understand what you see as the risks and then try to audit the information as you see it from your business’s point of view.
Many times, when companies end up producing extra reports for their auditors, it’s because they haven’t really sat down with them and explained their business properly.
What can a company do in advance of an audit to make the process go more smoothly?
The biggest mistake people make is thinking they can get everything ready just before the audit, and they underestimate the amount of time it will take them and their staff to gather that documentation.
Before an audit, a company should receive a ‘prepared by client’ list from the auditor. But a lot of times that list is very generic and not everything on it may apply to your company. So you should request a meeting to go through the list, asking things such as, ‘Why do you need this? This doesn’t pertain to our company,’ or ‘Instead of providing this, can we provide this instead?’ That leads to a more efficient audit and can save time and money on both sides.
An audit is a great burden on a company, especially if you have to provide extra reports for auditors and your employees are spending time answering auditors’ questions, so the better you can link what you produce on a daily business to the auditors’ requests, the more you can speed up the process.
Then, after you make sure the auditors are asking for the right things, come to an agreement on what they’re going to receive from you, what that information is going to look like and what that timeline is going to be. That stops the process of the auditors asking for something, you delving into it, then having them come back to say that’s not exactly what they needed. By setting expectations and timelines upfront, you can avoid this waste of time.