7 Ways to Satisfy Your Auditors
The relationship between CFOs and their auditors is a complicated one.
“Your auditors are exactly that—your auditors. They are not the enemy, and they are not your friends. You have a professional relationship with them, and you should conduct yourself in a cordial, professional manner,” says William F. Knese, chair-elect for the Institute of Management Accountants and
Auditors want to see whether your company has strong internal controls that minimize the
1. Don’t surprise them. Discuss all issues fully and openly with your auditors. The last thing you want is to give them the impression that you’re trying to conceal something. Remember, their job is healthy skepticism. They are happiest and less wary when they are confident that they understand your business and the
2. Be prepared. Make sure you have the proper support for your company's choices, and be sure that you can easily hand over your analyses and supporting documentation when requested. “Your auditors came to audit, and they will talk about you and charge you for all the time they spend understanding issues that you make difficult, or that are not clear and concise for them,” Knese says.
3. Explain the current state of the business. You may have to take the time to educate your auditors if they have not had much experience looking at companies in your industry. You know your business inside and out, including its unique facts and circumstances – it’s up to you or your
4. Have a tight expense system. If your company is lax on employee expense accounts – a prime spot for errors or false reporting – your auditors will naturally be inclined to question what other areas you have let employees slip away from your company's polices and procedures. Companies are increasingly using automated tools to enforce their internal policies, according to Ted Pastva, vice president of finance at Seamless Corporate Accounts.
5. Stay up-to-date with regulatory hot spots. For global companies, compliance with the Foreign Corrupt Practices Act (FCPA) has been a hot topic following high-profile allegations of companies bribing overseas government officials. While it’s unlikely accounting firms can be held liable for missing such activities, they don't want to be associated with companies that commit wrongdoing. FCPA and other areas top of mind for regulators could also be on auditors' list of what they consider “high-risk” areas, depending on your business’s activities.
6. Be open to
7. Be forthcoming. Don’t hide in your office and keep things from your auditors. They ultimately want to know whether you’ve been forthcoming in your financial reports. Don’t give them a reason to doubt the information in front of them.
After all, relationships – even those between auditors and clients – are built on trust. To feel confident in telling the world a company’s financial statements can be relied upon, auditors need to trust the integrity of
Keith Loria is a freelance writer who has written about everything from technology to corporate mergers to health care.