Guide to changing your auditor
Finding a new auditor when your current firm does not meet your needs
In this guide, learn how to assess whether your current auditor is right for you, and how to select a new audit firm when you need to.
As your business grows, your needs become more complex and specialized. You may require deeper industry knowledge, wider geographic reach, clearer communications or a stronger digital approach. When your audit firm can serve your evolving organization, your business goals come within reach. Otherwise, it may be time to change your auditor.
In fact, changing auditors isn’t unusual in the business world—it is a well established practice, with many organizations routinely reassessing their audit partners to align with evolving needs and strategic goals. For organizations, changing auditors can be a natural step in maintaining fresh perspectives and strengthening financial oversight.
While there is a science to finding the best auditing firm for your needs, there is also a soft-skills element. The chemistry you have with your auditor and your audit team can make all the difference. The right audit firm understands your business and delivers human insights powered by technology. But how do you find that firm, and once you do, how do you forge a productive working relationship?
Use these insights from RSM to help you make the right decision.
The guidance below is designed to lead you through the process of changing your audit firm and transitioning as smoothly and efficiently as possible. It is based on RSM’s deep experience in building new audit relationships with many companies over the years and should help give you a strong foundation for this important undertaking.
Table of contents
What are the most common symptoms of a suboptimal audit relationship?
What questions should you ask when evaluating an audit firm?
Why do technology and innovation matter when choosing an auditor?
What are some best practices for transitioning to a new audit firm?
A roadmap to change your auditor
What are the most common symptoms of a suboptimal audit relationship?
For many reasons, a company may feel that their audit firm is not meeting their expectations. In our experience, the top three things that companies are looking for in a better audit relationship are:
Industry or technical expertise
Your current auditor may not fully understand your industry’s specific complexities and regulatory requirements. They may not be able to handle your evolving financial reporting needs or provide technical accounting at the depth you need. There may be deficiencies in risk assessment and testing, and other quality issues. They may not be able to provide specialized audit services that you need beyond standard financial audits.
Strategic insight
Many companies want to derive more actionable information and unique insights from their financial reporting than their current auditor can provide. They want more than just an audit—they want to gain a better understanding of their business and leverage an audit firm’s experience working with similar companies. Therefore, they seek an auditor known for its deep analytical capabilities or industry-specific knowledge.
A consultative relationship
Many companies are seeking an audit firm that can provide strategic advice, innovative solutions and other value-added services. A strong relationship between a company and their auditor is critical for transparency, efficiency and collaboration. If your auditor doesn’t fully understand your business objectives or if you lack mutual trust and respect, it may be time to find a more productive working relationship to better support your needs.
Of course, there may be other reasons why you may believe it is time to change your auditor. For example, you may be expanding internationally and need an auditor with the global reach and capability to align with your growth strategy. Or you may be running into financing roadblocks because your current audit firm does not have the size and reputation to win the confidence of lenders and investors. Having a strong, reputable audit firm behind you can enhance the perceived reliability of your financial statements and creditworthiness, potentially leading to better financing terms.
Related insights
What questions should you ask when evaluating an audit firm?
When evaluating a new audit firm, it is important to get a good understanding of the firm’s capabilities, audit approach and general character. It makes sense to spend time on developing an RFP (request for proposal) specifically designed to test the unique fit between your company and the prospective firm.
To find an audit firm that is truly a great fit for your company, think beyond the audit itself. How can your auditor add value beyond the audit? Do they have deep experience in your industry and knowledge of best practices that you can leverage to improve your business? These criteria are often overlooked when searching for an auditor, but they can pay dividends over the long term.
Here, we list some top questions to ask a new audit firm during the evaluation process.
- What do you know about my industry?
- How does your firm provide value in delivering a financial statement audit?
- Can you grow with us?
- How do you structure your client engagements?
- How do you approach communication with clients?
- Do you have global capabilities and experience?
- Are your partners involved in the audit engagement?
- How would you describe your audit methodology?
- How do you leverage technology to optimize processes for a more tailored, digital audit?
- How do you obtain, store and safeguard client information?
Why do technology and innovation matter when choosing an auditor?
If your company is increasingly deploying advanced technology to become more efficient, you should expect your auditor to be doing the same thing—investing in technology to optimize the audit process and make it work better for you.
A digital audit ecosystem is now the entry point to a modern audit experience, so evaluate whether an auditor has innovation in their DNA. This is not just a matter of efficiency; it makes for a stronger audit relationship with clients and enables better insights for you.
Of course, technology on its own only goes so far. Leaning too heavily on technology may not provide the appropriate level of personal attention or the necessary technical insights.
What are some best practices for transitioning to a new audit firm?
Changing your auditor is not a light undertaking. You must be clear about your reasons for change and what you are looking for in a new auditor.
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Start with a strong RFP for audit services. Clearly spell out your needs to help build an auditor’s understanding of your company’s priorities and lay the groundwork for a smooth transition.
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Be clear about the areas you want to improve. For example, highlight key characteristics you seek in a new audit firm, such as communication skills, industry specialization, global capabilities and digital expertise.
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Ask prospective audit firms about:
- Their audit approach
- Their transition processes
- Their measures for ensuring client satisfaction
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Once you select a firm, educate your new audit firm on your company. Face-to-face interactions, whether in a conference room or a coffee shop or on the factory floor, are crucial to help new auditors understand your business and develop mutual chemistry in the relationships that matter in a high-quality audit.
Superior service has no size constraints, and a frictionless transition only amplifies the opportunities for your business.
Audit-related terms and FAQ
An unqualified audit opinion, also known as a clean audit report, states that a company's financial statements are accurate and comply with generally accepted accounting principles (GAAP).
It is issued when an auditor is satisfied with a company's financial reporting and believes that the company's operations comply with applicable laws and governance principles. It contains no adverse comments or disclaimers about the audit process. It is the highest level of assurance an auditor can provide on a company's financial reporting.
A company’s audit committee is responsible for overseeing the organization’s financial reporting and controls. Specific duties may include:
Compliance: Ensure the organization operates within the required legal and ethical framework and complies with regulations and industry guidelines.
Risk management: Oversee the company's risk management and internal control systems.
Financial reporting: Ensure the integrity and transparency of corporate reporting.
Audit: Oversee the organization's internal audit functions, assess the independence of external auditors and help the board appoint new auditors.
Regulation and governance: Stay ahead of regulatory changes and support the overall good governance of the company.
Audit methodology refers to a set of core testing methods that auditors use to provide confirmation and answers to a business during an audit. Methods range from asking questions to inspecting documents and redoing calculations. Core methods include the following:
Inquiry: Asking about existing controls
Observation: Observing activities and operations
Examination: Reviewing evidence to test the accuracy of a control
Re-performance: Reiterating calculations to validate a control
CAAT (computer-assisted audit technique): Using technology to analyze large volumes of data efficiently and accurately.
A full-service audit and assurance firm should be able to offer a range of services, including:
Financial statement audit: An independent examination of a company's financial statements to ensure they are accurate and fairly represent the company's financial position and performance.
Internal audit: An independent assessment conducted within an organization to evaluate business and operational matters as well as internal controls, risk management processes and governance practices.
ESG assurance: A thorough evaluation of a company’s environmental, social and governance (ESG) practices and reporting to ensure their claims about sustainability are accurate and trustworthy.
Due diligence: An independent assessment of a company's financial health and performance, typically conducted during mergers and acquisitions. This process involves examining financial statements, accounting practices, cash flow, liabilities and overall financial condition to identify any potential risks or concerns.
Preparation, compilation and reviews: A preparation involves compiling financial statements based on client information without providing assurance or a formal report. A compilation assists management in presenting financial statements, resulting in a formal report but still offering no assurance. A review entails performing specific procedures to obtain limited assurance and identify any necessary modifications to ensure compliance with applicable reporting standards.
Technical accounting involves analyzing, monitoring and managing financials in a way that demands advanced technical skills. Technical accountants provide solutions when a company lacks the time, talent, experience or expertise for a task or project. Techincal accountants may use their specialized knowledge to offer a variety of services, including:
- Accounting standards implementation
- Capital market services
- Transformative events support
- Accounting and finance optimization
- Complex accounting
- Global accounting assistance
- Strategic finance
Ready to change your audit firm?
Contact our audit and assurance services professionals today.
Additional resources
Learn more about what makes an audit firm right for your business
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