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My auditor is wrong, how do I convince them to change their mind?

Without going into details, I believe that my audit firm and, specifically, our partner, are going the wrong way in an asset valuation discussion for our annual audit and I think GAAP backs me up. But we are approaching loggerheads on the issue. Any suggestions on how I get him to reconsider, while at the same time not pissing him off? I don't want to kill what has been a good relationship, but I also don't like his current ruling.

Answers

Philip Alford
Title: CFO Partner
Company:
(CFO Partner, ) |

Do you have friends at other audit firms that you can test your theory vs his and see what their response is? Suggest you do it in confidence
There is normally a second/reviewing partner on every account..if there is a disagreement they should be called upon. There is likely also be a "technical" partner at the firm who can be consulted by the partner for difficult issues
Good luck

Topic Expert
Jeff Chase
Title: Advisory CFO
Company: Hazelcast, Juicebox Energy, and Social I..
(Advisory CFO, Hazelcast, Juicebox Energy, and Social Inertia ) |

I had this same problem 2 or 3 years back and decided that it wasn't something within my control, and sought out a compromise between my expensive valuation report and the auditor's appraiser opinion. It was a very unscientific compromise and simply reflected the partner's desire to enforce her firm's great appraisal knowledge above and beyond my expert's, expensive and well documented answer, via some figure we could live with. You can certainly ask to hear from the concurring or technical review partner, but they most likely will be deferential to the appraisal expert within their firm, or that seemed true in my case.

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

You can always fight for it. Not literally, but gather your defenses and push back again, so long as the lines of communication are still open.

I have had my share of disagreements with audit partners and as we all know, there is a lot of gray in the world of accounting. Get the authoritative literature, Q&A, and any real-world examples you can find. A former company of mine had questions around rev rec and we found a major public company doing it the way we wanted to (against the wishes of our big 4 partner) and upon showing them the press discussing the public company's rev rec decision (it got a good bit of coverage) along with their 10K, and once again showing how our rationale went along the same lines, that got them over the hump. Took a little work, but we got there and everyone was friends at the end of the day!

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