Checking References for New Auditors

A lot has been written about how to select a new audit firm, including lots of examples for requests for proposals (RFP) and example scoring criteria.

​One of the most important elements of the auditor selection process, however, that not much has been written about, is the reference checking for new possible audit firms.
So, below we describe an approach and provide a list of sample questions to ask during reference checking when you’re in the process of selecting a new audit firm.

Written audit proposals provide some very important information about an audit firm, including their industry experience, the fees they will charge, and a description of their audit approach. However, written audit proposals do not provide other important information such as:

• How responsive are they to questions and requests?
• How timely are their services?
• Under what circumstance do they ask for additional fees?
• How considerate are they to disruption of staff’s day-to-day duties?
• How satisfied are their clients?

Because such questions are best answered by talking to the firm’s current and former clients, checking references is vital. When the RFP asks the CPA firm to provide 3 to 5 references, they will of course provide their happiest clients; when you call for references, you will not learn a lot.

So, here’s our first tip: instead of just calling their listed references, call some of their other current and recent clients to get a better perspective. Most reputable audit firms will have a list of past/current clients on their website. If not, ask for a list to get a better understanding of the clientele they serve.

 

Here are some sample questions that you may find helpful in conducting reference checks for potential new audit firms:
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1. ​Was there audit staff turnover year to year for critical roles (i.e. Audit Senior/Supervisor, Manager)? If so, how did this impact the quality of the audit or the time required from staff?
2. Did the auditor meet your filing deadlines?
3. How well did they manage the relationship with your organization, including communicating  critical issues during and at the end of the audit?
4. How well did they work with your staff? With management? How did they handle differences/disagreements with regards to findings?
5. Were you satisfied with the level of service that you received?
6. Did they possess the knowledge of accounting and auditing issues critical to your business? How did this impact the quality of the end product?
7. Did they add value, knowledge and expertise that assisted your organization to improve its operations?
8. Were there any unexpected increases in professional fees?  If so, what were the circumstances?
9. Were they responsive and timely in returning calls and emails before, during and after the audit? 

Don’t shortcut checking references, as it frequently provides insights that will allow you to write a better contract, work more effectively with your new auditor, and avoid risks and conflict. 

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If you would like hands-on help, or a personalized consultation of how to select auditors, please email or call Kevin at:

[email protected]
(510) 593-5037

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