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Year End Audits: Collaborating with External Auditors

Scott Gunn's Profile

I am getting ready for my year-end "encounters" with external auditors which will begin shortly after year end. Being in Treasury I seem to get the "Greenest of the Green" in terms of external auditors.

Any advice on how I can "gently push back" to make sure that those giving  me the questions understand what they are asking so I do not need to "educate them" before I even get around to the "back and forth"? I am not known for my "bedside" manner with auditors and I get frustarted that they are more eager to "check off" items from their list than the amount of time they waste in getting those boxes checked.

Answers

Jim Scanlon
Title: Consultant
Company: JBS Consulting
(Consultant, JBS Consulting ) |

Scott - your situation is one we all can commiserate with … however the condition you have identified can be used to create an opportunity manage the external auditors and attain our goals (assuring users of our financials that statements are fairly stated and our controls are working properly)
as leaders of the business.

To deal with, what frankly, is a training issue (on the auditor’s ‘side’) I suggest you request an opening meeting with the audit team assigned to your area where you review your business and the relevant controls for which you are responsible. In the meeting, I suggest you offer/request to review the risk assessment for your area. The risk assessment will give you the roadmap the auditors intend to follow in auditing your area. To the extent you see a process or control identified as in scope that you don’t agree with, you would have the opportunity to indicate such and thereby direct the auditors to the areas where you believe risk is highest.

Much of our difficulty as auditees comes from our expectations of the auditors. We want the auditors to know our business and execute the audit from that place of understanding. However, auditors are generally expert only at auditing, we are the experts in our respective businesses. As business experts we want and need to leverage the auditors’ abilities to attain our goals.

By reviewing and as needed, commenting on the auditors’ risk assessments you create the opportunity to direct the auditors efforts before they show up in your office asking questions during the testing phase that should have been answered in planning.

W Terry Mitchell
Title: Principal/ Shareholder
Company: Jackson Thornton & Co.
(Principal/ Shareholder, Jackson Thornton & Co.) |

Does anyone have a "List of Yearend Planning Ideas" for the the External Audit?

Topic Expert
Karoline Mello
Title: Director, FP&A
Company: Apollo Group
(Director, FP&A, Apollo Group) |

Scott – that has been and I expect will continue to be an area of annoyance each year as part of my role as well, and I also am not known for being the sweetest personality in my organization. Your expectations will most likely go unmet of having an auditor understand your business and only ask relevant questions. The accounting that takes place running the organization is very different than the theory that is taught in school.
We deal with our auditors electronically (out of state) so we don’t have the formal sit down meeting that kicks off the audit. When we did we always gave them a physical tour of the location or had a video of the production or customer life cycle. Nothing an hour long, just a ten minute intro to what we do.
I’ve long stopped being surprised that the auditors don’t even look on the website prior to the visit to familiar themselves at all. We are truly just a list of boxes for them to check.

Topic Expert
Barrett Peterson
Title: Senior Manager, Actg Stnds & Analysis
Company: TTX
(Senior Manager, Actg Stnds & Analysis, TTX) |

The "price" of audit managers and partners is green juniors...who you will have to deal with. This is not likely to change, so I suggest you develop, in advance, an "education package" based on historical ignorance displays. That may get you through to daylight the fastest, your "least worse" option.

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