The ramifications of choosing the wrong auditor can have a profound effect on your business. The best-case scenario is you’ll manage to work for years to correct your mistakes. The worst case is the auditor will leave you vulnerable to massive penalties and legal issues that could run your accounts dry. That’s why it’s imperative to make this decision wisely.
Below are some of the key factors to consider when choosing an auditing professional or firm.
Qualifications
The firm you choose to work with must have credentials proving they have undergone the necessary training and are certified by the relevant board. The Sarbanes-Oxley Act of 2002 requires all companies auditing public businesses to be registered by the Public Company Accounting Oversight Board (PCAOB).
Hiring a firm that’s under the oversight of PCAOB comes with many benefits. First, it’s a show of credibility, which is good, especially when the Internal Revenue Service is going through your books. You really don’t want the investigators to find out that you’re even working with crooks.
Secondly, an auditing firm that has gone through the hassle of getting registered is probably serious and transparent about its business operations, meaning your books will be in good hands.
Such auditors are constantly appraised to the ever-changing tax and auditing regulations. They’ll utilize their knowledge to ensure your accounts meets all legal requirements.
Experience
An experienced auditor is a valuable asset to your business. Although these professionals are likely to charge higher fees, the knowledge, quality, and efficiency they bring to the table are unparalleled.
In your meeting with the company, ask them how many years they’ve been operating. Inquire about some of their previous and current clients. Look up the clients and see whether they’ve had any unfriendly encounters with the taxman.
Depending on the specific auditing problem you’re in, it may be vital to ensure the firm you’re hiring has experience in your industry. This is really important since certain regulations change based on the industry in question, i.e., is your company under not-for-profit, government, or public company regulations? Let the auditing firm show their track record.
Reputation And Reviews
Testimonials and references go a long way to tell you how good a company is doing its business.
There are two ways of getting these testimonials. You can ask the company directly about their other clients. Proceed to contact the clients and ask about the quality of services they receive. This option is as straightforward as it sounds, but it might not be very reliable. Why? Rarely will a business give you contacts for a client they hard a rough relationship with. And that’s why you cannot overlook option two.
Conduct your own research to determine how reliable the firm is. This is where business review websites like Yelp and google my business come in. You will find independent reviews that can paint an accurate picture of how it’s like working with the firm on a daily basis.
You could also tell the reputation of a firm by looking at their honors. Have they participated or won any auditing/accounting awards?
Size Of The Firm
Proper auditing takes a lot of effort and time. When IRS notifies you of an imminent field audit, the whole process becomes even more complicated. The Effective Audit Experts – Tax Shark explain that full-blown IRS field audits are rare, but they do happen, and they can put a business owner under immense pressure. In such situations, it’s imperative to hire a firm with the necessary capacity to handle your workload and keep you off the IRS radar.
A sizeable firm also adds value to your business. They’ll handle your accounting with efficiency to smoothen your business operations and adherence to the law. Sadly, big audition firms also charge higher fees.
Use Of Technology
Working with accountants that have embraced auditing technology is beneficial in various ways. For starters, it makes the auditing process more efficient. Tech can digest tons of data and produce accurate results much faster than traditional auditing techniques. This leaves you and the accountants with sufficient time to scrutinize the results and draw any anomalies that could be affecting your business.
Some of the latest auditing software are also developed to provide useful insights for better decision-making.
Tech-based auditors are very useful, especially to businesses that store their data electronically. They can even perform virtual audits and communicate their results and findings without interrupting the regular office operations.
If your business is still using traditional accounting techniques, good auditors will scale down their technology to address your unique needs.
Customer Service
It’s good for businesses to stick to one auditor for as long as possible. However, this is only possible if you hire a good and reliable firm. One that is helpful, friendly, and responsive.
For this reason, experts urge businesses to interview potential auditors in person. Take note of how they handle your questions and concerns. Check how accessible the senior employees are. Look around their offices and see whether they have sufficient capacity to handle your needs.
Fees
It’s okay to shop around for the best deal but keep in mind that you’ll always get what you pay for. Ideally, the auditor’s fees should be the last thing you consider since saving a few bucks is nowhere as important as ensuring your business gets accurate and reliable services.
If you have a limited budget, you are free to make several compromises, but do so carefully. For instance, you can opt for a smaller auditing firm since they usually charge less when compared to established auditors. Tech-based auditing may also be a reasonable trade-off if it’ll help you save a few dollars without hurting the services rendered.
Do not compromise on crucial factors like knowledge, experience, accreditation, and reputation/reviews.
Good auditors do more than just helping your business comply with legal requirements. They’ll generate valuable insights from raw data to help you make accurate and beneficial decisions affecting your business. Think of them as business partners.