Finding Your Perfect (Audit) Match: Best Practices for Choosing the Right Auditor

So you need an audit. And, therefore, you need an auditor. Out of the hundreds of options, which firm is the right fit?

Finding the right auditor match and searching for your soulmate (if you believe in those) share quite a bit in common.

High stakes at hand. It’s not a one size fits all approach. Communication and trust are key. 

Yet, while there may be a million apps and relationship gurus promising to help you find your significant other, last time we checked, the app store is vacant for a “Tinder for Auditors” equivalent.

So, to help you find your audit “soulmate”, we’ve compiled a few ways to pressure test whether or not you’ve found the right fit for your company.

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Why the Right Auditor Matters

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But first, is this choice really all that important anyway? On a ranked list of stressors in the lives of Controllers, audits are pretty high up there. 

Poorly executed and time intensive audits are a thing of nightmares. 

While much of having a smooth sailing audit is adhering to strong accounting practices and documenting effectively across the year, there’s certainly an element of audit-accounting team chemistry that can make or break your stress levels during audit season. 

The right audit partner is less of an adversary on the lookout for “gotcha” moments to include in an audit report and more a sounding board of best practices and extra set of eyes to spot operational efficiencies and the right way to apply guidance. 

You’re about to spend a decent amount of time on the audit, and consequently, with the auditor. Investing a bit upfront to ensure compatibility makes a world of a difference. 

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How to Choose the Right Auditor

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Before anything else, check the bare minimum boxes: auditors must be CPA accredited by the AICPA and independent. 

With those boxes checked, be on the lookout for the following signs that you’ve found the right auditor match for your company. 

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They understand you 

They understand your industry

Part of what makes an audit operationally helpful is working with experts in accounting for your specific industry. Ideally, the right auditor for your business is aware of the contours of how businesses like yours operate and can jump in with helpful insights on best practices in the space.
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They understand your approach to key accounting issues

Beyond audit experience in your industry, starting from the same page on some of the grayer areas of accounting can make an audit down the road much smoother. 

Specifically, clarify your current revenue recognition approach and other fundamental choices your team has made that impact reporting. While there are firm standards for much of accounting, ensuring that they understand the underlying rationale behind decisions you’ve made (of course within reason), can avoid headaches down the road. 

Other areas to discuss ahead of commitment — how do they think about materiality during the audit? What is their approach to out of period adjustments? 
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They’re the right match for your stage 

Looking to IPO in the next few years? You’ll want to lean towards working with a Big 4 or equivalent firm that works primarily with public companies.

On the other hand, are you simply looking for a first-time audit for your small business to check a box and move on? Working with a firm that focuses on smaller companies helps ensure that you’re aligned on the fidelity level of current auditing standards, internal controls, and the common questions that come up. 

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They’re supportive of your lean team

If your team is a CFO and two staff accountants or even smaller, your bandwidth is limited. Response times and existing accounting infrastructure are reasonably different from companies with more headcount. 

Check in with your auditor on the team size that they’re accustomed to working with. Are most of their clients in a similar position as you? 

When talking with auditors directly and speaking with references about their professional services, dig into the availability their team has for responding to questions across the year. The gold standard is that your audit team is a natural extension of your lean department, empathizing with where you’re at and helping you stay ahead of key accounting questions that otherwise might slip under the radar. 

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Communication is great 

Again, similar to what you’re looking for in a romantic partner, good communication forms the foundation of a strong relationship with an audit partner. 

Will they proactively provide advice when there are updates to guidance of financial statement disclosure requirements? Will they aid in planning for year-end far in advance? 

The right auditor will play a role in navigating key questions surrounding your business, including nuanced topics like stock based compensation and software capitalization. 

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Your friends love them 

You’ve interviewed auditor candidates on key questions around your current accounting processes, their industry experience, and have a good sense of their approach to communication. 

But like any first date, it can be hard to judge great first impressions versus what commitment will actually look like.

This is where references come into play. 

In an ideal world, your short list of which auditors to vet comes directly recommended from peers in the industry with similar stage companies. 

Absent clear recommendations from peers you know directly, every audit firm is required to have a peer review every 3 years by an independent CPA firm of their audit services. Reviewing the letter of conclusions can be a helpful datapoint. 

Ask for references directly as well. When speaking with references, double click on some of the more challenging areas to vet, like communication norms and a consultative approach. 
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You’re on the same page about long-distance 

Some teams prefer working with auditors remotely. Others prefer being able to grab lunch or stare at the same screen over a cup of coffee in the office. 

Some accounting teams want questions responded to during business hours. Others are already global and off-shore audit firms are a compelling choice. 

Think through what would be most helpful for your company and incorporate remote / in-person, off-shore / domestic into the calculus of audit firm selection. 

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They’re tech forward 

Especially if your accounting team handles a high volume of data, think large quantity of transactions or inventory with a significant number of SKUs, selecting an audit partner leveraging tech to streamline testing and processing big data sets can be a major time saver during the audit. 

The Big 4 have all invested in using AI to scan through journal entries to scan for anomalies based on timestamps, frequency, debits and credits which cuts down time spent pulling reports manually. 

Smaller firms are also increasingly investing in systems for risk management and quality control to avoid the need to pull reports and email back and forth to provide everything on a PBC list. 

If you’re using a close automation tool like Numeric, discuss their familiarity with receiving view-only access for self-service to an audit trail of controls, documentation, and substantiation. 

They’re available when you need them

Whether it’s in a debt covenant, equity rights agreement, or a statutory requirement, there’s likely a deadline for your audit. Work backwards from that deadline to make sure that they can devote enough time and staffing to get the audit completed by then.

As a ballpark, this means setting aside roughly three months and incorporating a buffer for first time audits of around 4 weeks for overages. The first year around there’s naturally a fair amount of “get-to-know-you” time, with their team understanding your data sources, workpapers, and business while you are gradually understanding the working rhythms and questions they may have.

Beyond making sure that together you can confidently meet your deadline, asking about timeline helps you gauge the resourcing they’ll allocate to your team and when. 

In a worst case scenario, as a small company you’ll be placed last on the priorities list for months in the flurry of audits for public companies. Instead of a drawn out audit lasting half a year, you want concerted attention to your company for a tight period to close out the audit and move on to other priorities. 

A clear timeline allows you to ensure that your team can plan effectively and work with auditors for an efficient audit.  

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It’s a two way street 

Finally, like all good relationships, it’s as much about you as it is about them. How positive your relationship is with an auditor will be in part dependent on your commitment to follow-through on implementing their recommendations and take them seriously. 

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Questions to Ask Your Potential Auditor 

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How practically can you vet for all of the above in your selection process? Much of it comes down to the questions you’re able to ask a potential auditor ahead of an external audit, starting with:

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• What rough timelines do you typically operate on for an audit? Provide a high level overview of what the audit process looks like. 
• How many clients in our industry do you currently have? 
• What unique issues do other companies in our industry typically face during an audit? What should we be proactive about? 
• What’s the typical meeting cadence during an audit engagement? How typically do companies communicate with your firm? 
• How many of your clients have accounting teams that are roughly the same size as our existing team? What stage of company do you typically work with? 
• When is your busiest time of year? Here look for ways to align the audit timeline to when everyone has adequate resources to fully focus on it.
• Walk me through the scope of a typical audit. 
• What criteria do you use to determine materiality? 
• Are you familiar with working with our ERP & tech stack? 
• What tech does your team use for risk assessment to test smartly? 

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The process of selecting an auditor

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Processes vary wildly for finding the right auditor match (the relationship parallel largely stops here, we don’t recommend compiling an RFP for romantic interests). 

For small companies, it’s common to:

1. Compile a short-list recommended by industry peers
2. Send emails to or get introductions directly with the short-list of auditors
3. Over calls with potential auditors, discuss key questions & get pricing information
4. Select who is the best fit

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At larger companies, there’s can be a bit more of a set in stone process, where it’s common to:

1. Pull together an audit selection committee 
2. Create a rubric or checklist for the audit committee to evaluate experienced auditors
3. Compile a list of potential audit firms that meet preliminary criteria
4. Create a Request for Proposal (RFP) for all potential auditors to complete 
5. Conduct interviews with the audit firms that fare well in the RFP process 
6. All committee members then review the RFP, peer review documentation, and references provided by the audit firms to select the right firm 

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A quick note on the cost of auditors

When evaluating which choice is the right fit, keep in mind that auditing isn’t an area to go with the cheapest bidder— avoid being penny wise and pound foolish. While for many companies, selecting a brand name firm is overkill and too pricey, real partnership and quality assurance come at a cost. Selecting auditors that can be a sounding board on complicated topics in the long-run ensures better financials and cost-savings down the road. 

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The Bottom Line on Selecting the Right Auditor

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While certain elements of audit firm selection are purely objective (industry experience, stage experience, CPA certification, etc.), there is a real subjective element to getting the match right.

Feeling comfortable around your auditor is critical to shifting audits from solely a burden to a mechanism to uplevel your team’s accounting and incorporate best practices. 

Like strong romantic relationships, the right audit match is built on a foundation of good communication, trust, and a shared understanding.